Professional services firm Aon has released its latest Climate and Disaster Insights The report explains how severe convective storms have surpassed tropical cyclones as the most expensive insured disaster of the 21st century.
The report draws on Aon’s global data, analytics and catastrophe modeling expertise to explain how the increasing frequency of high-impact weather events is reshaping global loss trends.
Aon’s analysis highlights that strengthening physical protection and financial structures are now critical to help organizations manage volatility, maintain insurance capabilities and support long-term resilience.
The insurance and reinsurance brokerage group reported that global economic losses from natural disasters will reach $260 billion by 2025, the lowest level since 2015. However, insured losses still amounted to US$127 billion, with insurance claims exceeding US$100 billion for six consecutive years.
Aon said the contrast reflects the ongoing impact of concentrated, high-severity events, particularly in the United States, which can cause significant insured losses even in years when overall disaster activity is relatively mild. Aon also highlighted that in many regions, especially emerging markets, more than half of economic losses are uninsured, putting communities and businesses under significant financial pressure.
Reports show that severe convective storms have now become the leading source of insured losses this century, largely due to recurring damaging storms across the United States. Aon estimates that these storms will cause $61 billion in insured losses globally in 2025 alone, making them the third-highest annual insured losses for this catastrophe on record.
Insurers covered nearly half of the world’s economic losses this year, narrowing the coverage gap to 51%, the lowest level on record, a result Aon attributed to the concentration of high-value events in the United States. In 2025, 49 events caused at least $1 billion in economic losses, while 30 events generated insured losses of similar magnitude, well above the historical average.
Aon Group’s assessment identified the Palisades and Eaton wildfires in California as the costliest events of 2025, with total economic losses of $58 billion and insured losses of $41 billion, making them the world’s costliest wildfires on record. The global death toll totaled 42,000, mainly caused by earthquakes and extreme heat, a figure 45% lower than the 21st century average.
Aon noted that the Myanmar earthquake was the deadliest single disaster after heat events, killing 5,456 people. Extreme heat has killed more than 25,000 people globally and remains the leading cause of disaster-related deaths, with 2025 the third warmest year on record.
From a regional perspective, Aon reports that the U.S. will account for more than 54% of global economic losses in 2025. Losses, primarily caused by wildfires and severe convective storms, were above historical normals, while insured losses reached US$103 billion, accounting for 81% of total global insured losses.
Across the Americas, Aon considers Hurricane Melissa the most devastating event, causing $11 billion in economic losses and $2.5 billion in insured losses in Jamaica, Cuba and neighboring regions. In South America, prolonged drought, especially in Brazil, resulted in approximately US$5 billion in agricultural losses, while Mexico, Ecuador and Bolivia were affected by flooding.
Aon found that across Europe, the Middle East and Africa, economic losses were well below the long-term average, with the biggest contributors being severe convective storms and the impact of drought, heat and wildfires in southern Europe. In Asia Pacific, Aon focused on an earthquake in Myanmar that caused $15.7 billion in economic losses, as well as severe flooding in China and hurricane damage in South and Southeast Asia. Australia has experienced two separate events, each resulting in insured losses exceeding $1 billion.
Aon’s 2026 Climate and Catastrophe Insights Report also points to the expanding role of alternative risk transfer in supporting recovery and resilience. Parametric insurance solutions, which provide rapid payouts once predetermined conditions are met, have proven particularly effective during events like Hurricane Melissa. Aon noted that Jamaica received more than $650 million in liquidity through parameter-triggered catastrophe bond protection within two months of landfall, supporting faster recovery efforts.
In addition to alternative risk solutions, Aon is calling for greater investment in resilience through improved technology and infrastructure. The report highlights the value of enhanced forecasting, stricter building standards and modernized infrastructure to limit long-term damage and accelerate the recovery of communities and businesses.
“This year’s report highlights the growing need for collaboration between organizations, insurers, governments and communities,” commented Greg Case, Aon President and CEO. “The insurance industry is well-positioned to serve as a strategic partner to help address these challenges, bringing record levels of capital to help clients address weather risks and building an increasingly diverse range of alternative risk transfer solutions to build resilience in the face of climate change.”
“Today’s resilience must be both physical and financial,” added Michal Lorinc, director of disaster insights at Aon and author of the report. “Organizations are urged to embed adaptation measures into their workforce and site strategies, invest in predictive analytics, and encourage a cross-functional approach to weather risks. As climate events continue to impact people and property, the opportunity is to use data to enhance preparedness, rethink risk management strategies and build partnerships that support faster recovery and long-term resilience.”
