A new report released by WTW Enterprise Willis with contributions from Willis Re shows that natural disasters will cause more than $100 billion in insured losses in 2025, marking the sixth consecutive year above this threshold and underscoring the continued severity and persistence of natural disaster risks even without a hurricane making landfall in the United States.
The findings are part of the company’s Natural Hazards Assessment, in which Cameron Rye, director of natural catastrophe analysis at Willis RE, noted that while insured losses in 2025 are about $40 billion lower than in 2024, good luck is no substitute for smart strategy.
Rai continued, “Even if 2025 can be described as a year of modest losses, catastrophe risks remain high and physical risks continue to increase as the world warms.
“Insurers should take immediate action to protect their portfolios from unsustainable accumulation of risk and prepare for a reversal of fortunes. Given these trends, the way forward is not to avoid risk but to encourage investment in risk protection and risk mitigation.
“Supported by advances in modeling, pricing and risk awareness, risk managers and sustainability teams can work together to protect business value.”
Key takeaways from the Willis report include the need to consider wildfires as a core driver of insurance portfolio volatility; to incorporate compound hazards into risk models; to recognize that warming in the North Atlantic is changing hurricane behavior; and to acknowledge that flood risks are no longer limited to formally defined areas, with tropical storms expected to bring more intense rainfall than in the past.
Willis observed that before 2025, eight wildfires have occurred in California, with insured losses exceeding US$2.8 billion, of which the 2018 Camp Fire was the most destructive (US$12.5 billion).
“In January, we were faced with the stark reality that wildfires could become more severe. The Eaton Fire and the Palisades Fire together burned nearly 60 square miles of Los Angeles County and destroyed more than 18,000 structures,” Willis added.
Insurance companies have reportedly paid out more than $22.4 billion to cover home, business, living expense, auto damage and other disaster-related claims related to the Eaton and Palisades fires.
Willis said total insured losses from the Los Angeles wildfires could approach $40 billion once all claims are paid.
On the hurricane front, Willis said the insurance industry should not be lulled into a false sense of security by year-over-year declines in insured losses.
The firm’s report explains: “We know that as the world warms, physical risks are increasing. Sooner or later all good luck must come to an end. Insurers should take immediate action to protect their portfolios from an unsustainable accumulation of risk and prepare for a reversal of fortunes.”
“Even if no hurricanes make landfall in the United States, global insured losses from natural disasters will still exceed $100 billion by 2025,” said Scott St. George, director of weather and climate research at Willis Research Network.
“This tells us that the risk floor for catastrophic danger is higher than ever. Beyond current headlines, our team of experts digs deep into the structural stresses, ignored warning signs and systemic vulnerabilities that are multiplying the impact of natural disasters in 2025.
“Our view of the changing risk landscape provides advice to insurers seeking to update their view of these risks, including the growing affordability crisis in many markets.”
