Reinsurance brokerage and advisory firm Gallagher Re has released its 2025 full-year natural catastrophe and climate report, which reports that global natural catastrophe losses in 2025 are largely controllable for the reinsurance industry, with total insured losses estimated at $129 billion for the year, about 5% lower than the average recorded between 2015 and 2024.
Losses were mainly concentrated in the United States, with losses amounting to US$100 billion, accounting for 78% of global insured losses. For insurance companies, the costliest event occurred early this year, when the Los Angeles wildfires in January caused an estimated $41 billion in insured losses. Losses caused by severe convective storms accounted for at least 47% of total global insured losses, equivalent to US$60 billion, of which US$51 billion was lost in the United States.
Natural disaster activity has affected many regions around the world, but overall the financial impact has remained manageable. La Niña prevails for much of the year, leading to a range of weather and climate extremes in both advanced and emerging economies, many of which remain at increased risk of disasters.
Direct economic losses from natural disasters are estimated at $296 billion. The difference between total economic losses and insured losses, known as the coverage gap, reaches 56%, or $167 billion, by 2025. At least 58 incidents resulted in economic losses exceeding $1 billion, and at least 23 of those incidents also met the same insured loss threshold.
Looking only at weather- and climate-related events in 2025, excluding earthquakes and other non-atmospheric disasters, economic losses are estimated at $277 billion. Insurers covered about $125 billion of that amount. The Los Angeles wildfires in January 2025 once again became the largest loss sequence for insurance companies, with losses reaching US$41 billion.
Insured losses from severe convective storms are at least US$60 billion, accounting for 47% of total losses. Global losses from this hazard total $208 billion in current U.S. dollars in 2023, 2024 and 2025, of which $176 billion, or 85%, will occur in the United States. As a result, severe convective storms have become a major driver of annual losses in the industry.
While overall data may suggest that 2025 is a year of relatively low losses, the report highlights that some countries have experienced significant financial stress following major disaster events. Jamaica, Myanmar, Indonesia, Sri Lanka and Pakistan have all been affected, with limited insurance coverage exacerbating recovery challenges.
The report notes the ongoing impact of climate change on global weather patterns and individual events, while also stressing that this does not mean there will be a steady or consistent increase in hazard frequency or severity across all regions or hazards. Instead, larger changes at annual and regional levels are expected, which could lead to greater losses and wider social consequences.
While more extreme event behavior is expected to occur in an increasing number of cases, the report warns against assuming that recent multi-year trends represent a permanent shift. Continued investment in adaptation, mitigation and effective public policies is considered critical.
As the industry heads into 2026, Gallagher Re says the financial position of the reinsurance market is strong. After several years of manageable disaster losses, total capital available for deployment has reached a record $838 billion. The company’s 2026 First View report noted that property pricing in disaster plans that were not affected by losses dropped by an average of 10% to 20%, while in areas experiencing significant loss activity, prices remained largely stable.
2025 will also be the third warmest year on record, according to data from major global scientific institutions and data sets. This is also the first year since 2015 that no hurricane has made landfall in the continental United States. Other topics explored in the report include the impact of El Niño and La Niña on the rapid intensification of tropical cyclones, trends in weather and climate-related funding within insurtech, and the continued growth of climate litigation.
While overall loss data may point to a quieter year, report author Steve Bowen, chief scientific officer at Gallagher Re, highlighted the uneven distribution of the impact, particularly in areas where the majority of losses remain uninsured. Although the industry enters 2026 well capitalized, Bowen warned against complacency.
“The complexity of natural hazard events reinforces the need for a better understanding of how physical and non-physical risk conditions evolve and become increasingly interconnected,” he said.
The report also identifies the widespread use of artificial intelligence (AI) as a key development in weather and climate forecasting. Gallagher Re expects this trend to continue into 2026 and beyond. AI-based models improve the industry’s ability to analyze large amounts of data, enhancing analytical capabilities and supporting more informed risk management decisions.
In the field of tropical cyclone forecasting, 2025 marks an important step towards the incorporation of artificial intelligence into official agency tools for predicting storm formation, track and intensity. While early results show promise, the report notes that further refinement is needed to improve accuracy for factors such as precipitation and other compound drivers of storm risk.
As a result, scientists and other professional users are expected to continue to rely on a combination of next-generation AI prediction tools and established numerical weather prediction models when assessing future weather and climate risks.