Over the last seven years, average annual losses have consistently hovered around this figure, at approximately $146 billion. Modelled projections suggest similar outcomes, with one industry report placing the global average annual loss at $151 billion. This trend, coupled with the increasing exposure of high-value assets and inflationary pressures on construction, indicates that the $150 billion threshold may indeed represent a new normal.
Weather-related events remain the primary drivers of these losses, dominating the claims landscape. While the 2011 Japanese earthquake stands out as an anomaly among predominantly weather-driven catastrophes, it underscores the pressing need for improved resilience planning and financial preparedness. Maintaining the strength of balance sheets is not just a financial imperative but a societal one, ensuring the capacity to continue protecting communities globally.
A closer examination of 2024 reveals pronounced deviations from the ten-year averages for severe convective storms (SCS), tropical cyclones, and floods. Notably, SCS accounted for approximately $64 billion in insured losses, with the United States alone contributing nearly $100 billion in 2023. A significant portion of these losses, 63%, originated from non-peak perils, a trend that has held steady over the last decade. This suggests a growing urgency for insurers to reassess how these increasingly common and costly events are addressed.
Furthermore, the number of billion-dollar NatCat events in the United States reached a record high of 21 in the past year. Despite this, reinsurers appear to be retreating from exposure. Their share of global insured NatCat losses has decreased from 9.2% to 6.9%, even as the total volume of losses increased. Concurrently, the impact of NatCat losses on reinsurers’ combined ratios has fallen dramatically, from 12% to just 4%, while direct insurers have experienced a more modest increase. This shift reflects the growing pressure on primary insurers to absorb losses from high-frequency, lower-severity events, which, although individually manageable, collectively represent a significant financial burden.
In Europe, hail has emerged as a particularly impactful peril. In countries like Italy, rising loss activity appears closely linked to both an increased frequency and severity of hailstorms, driven by favourable atmospheric conditions for severe thunderstorms. This pattern contrasts with the US, where the number of hail events is increasing, but the associated losses have remained relatively stable, suggesting that localised factors, such as urban expansion and economic growth, may be more influential than climate change alone.
From 2020 to 2024, insured SCS losses in the United States amounted to $581 billion, with Texas leading in terms of total claims. The analysis attributes the majority of this figure to factors such as GDP growth, inflation, and urban sprawl, rather than shifts in natural hazard intensity. In areas like San Antonio and Austin, a 36% increase in urban footprint corresponds closely with areas of elevated hail damage.
Flood risk in Europe presents a more complex picture. While annual insured flood losses have not exhibited a clear upward trend, extreme rainfall events are increasing in frequency and intensity. Recent examples include Storm Daniel in Greece (September 2023), Storm Boris across central and eastern Europe (2024), and the Spanish floods in Valencia (October 2024). Each of these events broke daily rainfall records, yet thanks to advanced catastrophe models and satellite imagery, insurers now have powerful tools to accurately map, quantify, and understand these events.
Flood mitigation measures play a critical role in reducing losses and improving model accuracy. For instance, simulations of Storm Boris show that existing flood defences halved the potential loss, raising the return period from 1-in-40 to over 1-in-100 years when defences are removed. The UK government’s investment in flood resilience, currently delivering returns of £7-8 for every £1 spent, demonstrates the cost-effectiveness of proactive risk management.
Ultimately, the convergence of urban growth, economic development, and evolving climate patterns is reshaping the global catastrophe risk landscape. The insurance sector must adapt by recalibrating risk transfer mechanisms and investing in models that reflect current realities. In doing so, it can continue to fulfil its essential role: protecting people, assets, and economies in a world where extreme weather is no longer the exception but increasingly the rule.
