The Gallagher Re “Natural Catastrophe and Climate Report” reveals a complex picture of global risk trends in the first half of 2025. While the overall economic losses from natural perils hit their lowest point in more than a decade, the insured losses told a very different story, spiking well above long-term averages. For insurers, reinsurers, and risk managers, the report offers valuable insight into emerging patterns that could shape pricing, coverage, and preparedness for the remainder of the year.
Global Losses: A Tale of Two Realities
Economic losses:
- Totaled USD 151 billion, the lowest first-half total since 2021.
- Slightly above the 10-year average of USD 144 billion, but significantly lower than recent peak years.
Insured losses:
- Surged to USD 84 billion, which is 55% higher than the decadal average of USD 54 billion.
- This is the highest H1 insured total since 2011, driven primarily by U.S. weather-related events.
This mismatch underscores a familiar trend: more losses are shifting into the insurance sphere, especially for weather-driven disasters, while uninsured losses remain more stable.
U.S. Weather Events Dominated Insured Costs
The United States was at the center of this spike in insured losses, accounting for 92% of all weather- and climate-related insured costs worldwide. Two key drivers were:
- California wildfires (USD 40 billion in losses)
- Severe convective storms in the Midwest and Southeast (USD 33 billion)
Together, these events made up 87% of all global insured losses in the first half of the year. This mirrors a broader shift toward higher-severity, localized events rather than widespread, multi-country catastrophes.
Fewer Billion-Dollar Events Globally
While the U.S. bore the brunt of insured costs, globally there were only 14 billion-dollar loss events — 13 in the U.S. and one in Asia-Pacific. This is the smallest number of major H1 events since 2019, highlighting how regional concentration can still create major financial strain for insurers.
Market and Climate Outlook
Reinsurance pricing pressures easing:
- Despite heavy U.S. losses, Gallagher Re estimates a 10-15% reduction in average pricing for Florida’s reinsurance market after the June/July renewals.
- However, the diversity of risk profiles means pricing remains highly granular, with some areas still seeing elevated rates.
ENSO-neutral conditions to persist:
- NOAA forecasts a near-average Atlantic hurricane season, though above-average activity is still possible.
- The Pacific is also heading toward a more neutral climate phase, reducing the likelihood of extreme anomalies.
Climate signal still evident:
- Global temperature anomalies were +1.40°C above pre-industrial baselines, reinforcing long-term climate risk trends.
Key Metrics at a Glance
- 21 billion-dollar global economic events—the fewest since 2019
- 73% of global economic losses were in the U.S.
- 89% of insured losses were in the U.S.
- 67 billion USD in insured weather/climate losses, representing 56% of all H1 event costs
What This Means for Insurers and Risk Managers
This mid-year snapshot suggests that localized high-severity events remain the biggest driver of insured losses, even when the overall global disaster footprint appears manageable. For the insurance and reinsurance markets, this means:
- Continued focus on regional underwriting precision, especially in the U.S.
- The need to review pricing models for secondary perils, like wildfires and severe convective storms, which increasingly rival hurricanes in cost.
- Capital management strategies must account for high-loss concentration even in years with fewer large-scale events.
Looking ahead, the rest of 2025 will hinge on the Atlantic hurricane season and whether current ENSO-neutral conditions hold. While the report signals cautious optimism, insurers should remain prepared for volatile, climate-driven risks that can escalate quickly.
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