A new Swiss Re Institute study warns that insured catastrophe losses could reach $107 billion globally in 2025, underlining how extreme weather events are becoming a persistent financial shock rather than an occasional anomaly. The forecast takes into consideration growing losses from severe convective storms and wildfires, especially in the United States, which alone accounted for 83% of the world’s insured disaster losses this year. The amount is lower than Swiss Re’s previous estimate of $150 billion. However, it still marks the sixth year in a row that insured losses from natural disasters have exceeded $100 billion, raising questions about risk concentration, insurance costs, and long-term resilience.

Why the United States Dominates Global Losses

The Swiss Re report highlights that insured catastrophe losses could reach $107 billion, primarily because of escalating exposure and climate-driven hazards in the U.S. market. Rising asset prices, an increase in the frequency of extreme events, and population growth in high-risk locations have all contributed to insured losses reaching previously unheard-of heights.

Important motivators consist of:

• Record-breaking wildfires: With insured damages of $40 billion, the Palisades Fire in Southern California burned over 23,000 acres and became the most expensive wildfire in the world.
• Severe convective storms: Thunderstorms that produced hail, tornadoes, and flash floods caused $50 billion in insured losses globally in 2025, making it the third most expensive year ever for these incidents.
• Market concentration: Compared to many developing regions, losses are more likely to be covered due to the size and penetration of the U.S. insurance industry.

These developments are prompting insurers to reevaluate underwriting procedures, raise premiums, and, in some cases, withdraw from high-risk areas, creating gaps in protection for businesses and households.

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Reinsurance, Risk Models, and a Shifting Baseline

According to Swiss Re’s leadership, insured catastrophe losses could reach $107 billion, not because of a single extraordinary event, but because elevated losses are becoming the “new baseline.” The Group Chief Economist at Swiss Re, Jérôme Jean Haegeli, highlighted the reinsurers’ dual function as financial shock absorbers and facilitators of risk-aware public policy and private investment.

Significant findings from the report consist of:

• Risk models are under constant pressure: Conventional catastrophe models are being adjusted to account for increasingly erratic loss patterns and compounding climate concerns.
• Higher premiums and stricter underwriting: In the wake of several years with significant losses, insurers are emphasizing capital discipline.
• Mixed regional effects: Despite an active season, no storms made landfall in the United States in 2025, which helped keep total losses below earlier projections. However, wildfire and storm losses increased.

The ongoing increase in losses underscores the need to invest in resilience and adaptation to better prepare communities for future shocks, according to Monica Ningen, CEO of Swiss Re’s U.S. Property and Casualty division.

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