Hurricanes and earthquakes could lead to global insured losses of USD 300 billion in a peak year, finds Swiss Re Institute
2025 started with wildfires in Los Angeles, causing an estimated USD 40 billion in insured losses. While these losses from a secondary peril are substantial, primary perils remain the biggest threat: when a severe hurricane or strong earthquake hits a densely populated urban area, insured losses in that year could be more than double the long-term loss trend. Based on model analysis, Swiss Re Institute estimates that hurricanes and earthquakes could drive global insured losses to USD 300 billion or more in a peak year.
Urs Baertschi, CEO Property & Casualty Reinsurance at Swiss Re, said: “In addition to helping clients with traditional risk transfer, reinsurers also provide data, risk insights and knowledge about where dangers lie. The reinsurance industry is a shock absorber when danger materialises into disaster and an essential discussion partner around risk awareness and risk prevention.”
Peak years, due to a few primary-peril events or the accumulation of both secondary-peril and primary-peril events, should not be considered an anomaly. The most recent peak year was 2017, driven by Hurricanes Harvey, Irma, and Maria. Since then, underlying risk has increased continuously with economic and population growth as well as urban sprawl, including in areas vulnerable to natural catastrophes. In addition, climate change effects are playing a role in compounding losses for some weather perils and regions.
Balz Grollimund, Swiss Re’s Head of Catastrophe Perils, said: “Our recent analysis of over 200 in-house models and the loss trend over the last 30 years show what is at stake: When a severe hurricane or a major earthquake hits an urban area in a country with significant insurance take-up, insured losses could easily reach USD 300 billion in that year.”
According to Swiss Re Institute estimates, some of the hurricanes from the early 20th century would cause losses well over USD 100 billion if they were to strike today. For example, Hurricane Andrew in today’s prices caused USD 35 billion in insured losses in 1992. If a hurricane were to strike the same path today, it would cause losses nearly three times higher, due to economic growth, population increase and urban sprawl. Meanwhile, Hurricane Katrina, the costliest single insured loss event for the re/insurance industry ever, would not cause the same destruction as 20 years ago. Insured losses would still reach around USD 100 billion due to rising housing and construction costs, but improved flood defences and a 20% decrease in local population along Katrina’s path have significantly reduced exposure.
Exposure to natural catastrophes drives US insurance claims costs
While loss severity is rising globally, the US accounted for almost 80% of global insured losses in 2024, due to its vulnerability to severe thunderstorms, hurricanes, floods, wildfires and earthquakes. Insurance premium rates are informed by many factors including local regulations and inflation. Yet in the long-run and across geographies, the main factor determining claims cost and premium rates is exposure to natural perils. This is evident in states like Florida, Texas, California, Louisiana and Colorado, which account for about 50% of all natural catastrophe losses in the US. Florida faces high hurricane-related losses, with premiums per household twice the national average. Similarly, in California, the highest premiums are localised in areas with greatest exposures to wildfire risk.
As natural catastrophe losses continue to rise, it is crucial to reduce loss potential from the outset, both to reduce the cost of insurance and to maintain the viability of risk transfer business. For example, severe storms can overwhelm local protection systems and cause flooding, and while mitigation measures come at a price, a recent Swiss Re Institute study shows that flood protection through dykes, dams and flood gates is up to ten times more cost-effective than rebuilding after a disaster.
Jérôme Haegeli, Swiss Re’s Group Chief Economist, said: “Close collaboration between the public and private sectors is vital for effective protection measures to reduce losses. In addition, a well-capitalised reinsurance sector, backed by USD 500 billion in capital, acts as a vital shock absorber, helping communities and economies recover more quickly. That is why it is important that capital grows in line with rising risk, for the industry to fulfil their role for future peak years.”
Total economic and insured losses in 2024 and 2023
In 2024, global insured losses from natural catastrophes reached USD 137 billion, driven by Hurricanes Helene and Milton, severe convective storms in the US, wildfires and major floods worldwide.
USD billion in 2024 prices
2024
2023
Previous 10-y average
Economic losses (total)
328
303
254
Natural catastrophes
318
292
242
Man-made catastrophes
10
11
13
Insured losses (total)
146
125
108
Natural catastrophes
137
115
98
Man-made catastrophes
9
10
10
Note: Due to rounding, some totals may not correspond with the sum of the separate figures.Source: Swiss Re Institute
Hurricanes, severe thunderstorms and floods drive insured losses above USD 100 billion for 5th consecutive year, says Swiss Re Institute
Estimated insured losses from natural catastrophes on track to exceed USD 135 billion in 2024
Hurricane Helene and Hurricane Milton severely impacted the US, resulting in estimated insured losses approaching USD 50 billion
Major floods hit Europe and the Middle East, causing estimated insured losses of close to USD 13 billion as of today
With 1.54°C above the pre-industrial average, 2024 is set to become the hottest year on record. A warming climate favours the occurrence of many of the natural catastrophes observed in 2024. Europe, in particular, has experienced intense flooding in 2024, resulting in the second-highest insured losses from floods in the region ever, according to Swiss Re Institute’s estimates. The US has been affected by two major hurricanes and a high frequency of severe thunderstorms, making up at least two thirds of 2024’s global insured losses of more than USD 135 billion as of today’s estimates.
Balz Grollimund, Swiss Re’s Head Catastrophe Perils, says: “For the fifth consecutive year, insured losses from natural catastrophes break the USD-100-billion mark. Much of this increasing loss burden results from value concentration in urban areas, economic growth, and increasing rebuilding costs. By favouring the conditions leading to many of this year’s catastrophes, climate change is also playing an increasing role. This is why investing in mitigation and adaptation measures must become a priority.”
Flood risk is rising globally
In 2024, severe floods in Europe and the UAE resulted in estimated insured losses of close to USD 13 billion to date. It was the third-costliest year for this peril globally and the second costliest for Europe which experienced insured losses of approximately USD 10 billion, according to Swiss Re Institute’s estimates.
Intense precipitation in April caused floods in the Gulf region, disrupting the operations of the world’s busiest airport of Dubai. In September, Storm Boris caused major floods in Central Europe, mainly affecting the Czech Republic, Poland and Austria. Additional impacts were reported from Slovakia, Romania, Italy and Croatia. While so-called Vb lows – slow-moving, low-pressure systems – are nothing unusual in the region, the strong intensity of the Vb system connected to Storm Boris is favoured by conditions related to climate change. Storm Boris mixed cold Arctic air flowing southwards with unusually warm air from the east and south, drawing moisture from a record-breaking warm Mediterranean Sea.
In October, large parts of Spain experienced heavy rainfall, flash floods and hailstorms, which caused severe damage. The floods were worst in eastern and southern Spain, with most of the damage across the Valencia and Castilla-La Mancha regions. Andalusia and the Balearic Islands were also affected. One year’s average precipitation was dumped in less than eight hours in many locations. Steep clay terrain and drainage systems could not absorb the exceptional amount of water, leading to fast overflows.
Pluvial floods can severely affect urban areas
Floods come in varied forms. The most common are fluvial and pluvial floods, and in coastal areas, storm surge floods. Fluvial floods can happen after periods of heavy rainfall. They usually affect areas close to rivers where flood waves can build up gradually or rapidly and last for a longer period. Pluvial floods can happen anywhere and affect all kinds of (urban) areas. They cause flash floods after extreme rainfall in a short period of time because large parts of soil are sealed and therefore cannot absorb the excess of water as drainage systems are overwhelmed. Floods can also manifest as secondary effects of primary perils. This is the case for tropical-cyclone-induced flooding from storm surge and rainfall.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, says: “Economic development continues to be the main driver of the rise in insured losses resulting from floods, but also other perils, seen over many decades. However, with natural catastrophe risks rising and higher price levels, the annual increase of 5–7% in insured losses will continue, and protection gaps could remain high. This highlights the need for adaptation in combination with an adequate insurance coverage that can support financial resilience.”
Losses are likely to increase as climate change intensifies extreme weather events while asset values increase in high-risk areas due to urban sprawl. Adaptation is therefore key, and protective measures, such as dykes, dams and flood gates, are up to ten times more cost-effective than rebuilding.
2024: Hurricanes and severe thunderstorms, with US hardest hit
At least two thirds of this year’s insured losses are attributable to the US: Two major hurricanes made landfall within a fortnight on the coast of Florida in September and October this year. Hurricane Helene made landfall as a major hurricane on 27 September, followed by Hurricane Milton on 9 October. Insured losses from both hurricanes are expected to amount to below USD 50 billion as of today. Additionally, 2024 experienced a high frequency of severe thunderstorms (severe convective storms, or SCS), which affected mostly the US. Insured losses from SCS are expected to add more than USD 51 billion globally for 2024 as of today, the second-highest loss after the record high of approximately USD 70 billion in 2023.
Table 1: Estimated total economic and insured losses in 2024 and 2023
(USD billion in 2024 prices)
2024
2023
Annual change
Previous10-y average
Economic losses (total)
320
302
6%
254
Nat cat
310
291
6%
241
Man-made
10
11
–8%
13
Insured losses (total)
144
125
16%
108
Nat cat
135
115
17%
98
Man-made
9
10
–7%
10
Source: Swiss Re Institute
Hurricanes, cold waves, tornadoes: Weather disasters in USA dominate natural disaster losses in 2021
In 2021, natural disasters caused overall losses of US$ 280bn, of which roughly US$ 120bn were insured
Alongside 2005 and 2011, the year 2021 proved to be the second-costliest ever for the insurance sector (record year 2017: US$ 146bn, inflation-adjusted) – overall losses from natural disasters were the fourth-highest to date (record year 2011: US$ 355bn)
Hurricane Ida was the year’s costliest natural disaster, with overall losses of US$ 65bn (insured losses of US$ 36bn)
In Europe, flash floods after extreme rainfall caused losses of US$ 54bn (€46bn) – the costliest natural disaster on record in Germany
Many of the weather catastrophes fit in with the expected consequences of climate change, making greater loss preparedness and climate protection a matter of urgency
The images of natural disasters in 2021 are disturbing. Climate research increasingly confirms that extreme weather has become more likely. Societies need to urgently adapt to increasing weather risks and make climate protection a priority. Insurers meet their responsibilities by covering a portion of the risks and losses. By applying risk-adequate premiums, they put a price on natural hazards, thereby encouraging carefully considered behaviour to limit the losses. At the same time, severe volcanic eruptions and earthquakes in 2021 showed that we should not overlook these categories of natural disasters either.
Torsten Jeworrek
Member of the Board of Management
Exceptionally high proportion of losses in USA
The USA accounted for a very high share of natural disaster losses in 2021 (roughly US$ 145bn), of which some US$ 85bn were insured. Both overall and insured losses were significantly higher than in the two previous years (Overall losses 2020: US$ 100bn, 2019: US$ 52bn; insured losses 2020: US$ 67bn, 2019: US$ 26bn). In detail:
Tornadoes
In December 2021, a series of severe storms across several states in the central and southeastern USA led to exceptionally high losses, especially for the month of December. Dozens of violent tornadoes with wind speeds of up to 310 km/h (190 mph) carved a trail of devastation across six states. Especially hard hit was the town of Mayfield, Kentucky, where a long-track, massive wedge-type EF4 tornado roared through the neighbourhood. Large parts of the town, including a candle factory, were completely destroyed. According to initial estimates, overall losses amount to around US$ 5.2bn, with projected insured losses of US$ 4bn. An estimated 90 people were killed.
Tropical storms: The Atlantic hurricane season
The costliest natural disaster in 2021 was Hurricane Ida, which made landfall on 29 August 90 km south of New Orleans as a major hurricane (Category 4, the second-most destructive), with wind speeds of around 240 km/h (150 mph). Tens of thousands of buildings were damaged or destroyed. The New Orleans levee system, which was strengthened following Hurricane Katrina in 2005, withstood the storm surges, thereby preventing much higher losses.Hurricane Ida then tracked to the northeast, causing severe flooding, in particular in New Jersey and the New York City metropolitan area. Overall, Hurricane Ida caused losses of US$ 65bn, of which approximately US$ 36bn were insured (55%). A total of 114 people lost their lives.Hard on the heels of the previous record-setting 30 named tropical storms in 2020, storm activity during the 2021 hurricane season was again significantly above the long-term average (14.3 for the period 1991 to 2020), with 21 named tropical storms.
Deep freeze
In February, an exceptional cold wave brought icy temperatures as far as the southern USA. A temperature of -8°C (17°F) was recorded in the southern Texas city of Houston. Although the state of Texas experiences a major freeze event about once a decade, the state’s energy, infrastructure and buildings are often inadequately prepared for such conditions. Millions of people were left without electricity. Overall, with losses of US$ 30bn (half of which were insured), the event was the year’s third-costliest natural disaster.
Europe: Extreme flash floods with record losses
In Europe, torrential rainfall in July 2021 triggered exceptionally severe floodings that caused devastating losses in local areas, particularly in western Germany. In the regions affected, the rainfall caused by the low-pressure system “Bernd” was the highest in over a hundred years. In tributaries, such as the River Ahr in the Rhineland-Palatinate, the deluge triggered flash floods that swept away countless buildings. There was also severe damage to infrastructure, such as railway lines, roads and bridges. More than 220 people were killed.
Overall losses came to €46bn (US$ 54bn), of which €33bn (US$ 40bn) was in Germany. The insured portion was relatively low because of uninsured infrastructure losses and the limited insurance density for flooding in Germany. €11bn (US$ 13bn) was insured, of which €8.2bn (US$ 9.7bn) was in Germany, according to figures provided by the Association of German Insurers. It is the costliest natural disaster in Germany and Europe to date.
What effect is climate change having?
Ernst Rauch, Chief Climate and Geo Scientist at Munich Re, and head of the Climate Solutions Unit, commented as follows on the figures:
“The 2021 disaster statistics are striking because some of the extreme weather events are of the kind that are likely to become more frequent or more severe as a result of climate change. Among these are severe storms in the USA, including in the winter half-year, or heavy rain followed by floods in Europe. For hurricanes, scientists anticipate that the proportion of severe storms and of storms with extreme rainfall will increase because of climate change. Even though events cannot automatically be attributed to climate change, analysis of the changes over decades provides plausible indications of a connection with the warming of the atmosphere and the oceans. Adapting to increasing risks due to climate change will be a challenge.”
Relatively low losses in Asia-Pacific region
In the Asia-Pacific region, losses remained modest. With overall economic losses of US$ 50bn, of which US$ 9bn were insured (insurance gap 83%), the region accounted for just 18% of overall losses and 7% of insured losses. The costliest natural disaster was a severe flood in Henan Province in central China, where countless rivers, including the Yellow River, burst their banks. Hundreds of thousands of homes were flooded. Overall losses came to some US$ 16.5bn, with only about 10% of these insured.
A 7.1-magnitude earthquake struck off the east coast of Japan on 13 February. The earthquake was not far from the epicentre of the Tohoku earthquake off Japan’s northeast coast, which ten years earlier had triggered a devastating tsunami that led to the Fukushima nuclear disaster. The latest earthquake caused substantial losses of US$ 7.7bn, with insured losses in the region of US$ 2.3bn (insurance gap: 70%).
Volcanic eruptions and earthquakes – an underestimated threat?
Along with the earthquakes in Japan, several violent volcanic eruptions following a number of more peaceful years underlined the threats from geophysical catastrophes. In September, the Cumbre Vieja volcano in the south of La Palma in the Canary Islands erupted. Giant streams of lava flowed all the way to the sea. Some 3,000 properties were buried under lava streams and layers of volcanic ash. It was not until 25 December that the authorities were able to officially declare the eruption over. Losses are in the region of €850m (US$ 1bn). Only a small portion of this is likely to be insured.
On the Indonesian island of Java, the Mount Semeru volcano erupted in December. The event produced what are known as pyroclastic flows consisting of hot ash and rock at temperatures of around 1,000°C, which is why such eruptions are far more dangerous than those with lava flows. More than 50 people were killed.
Even in industrialised countries, there is still a large insurance gap
On a global level, around 57% of losses from natural catastrophes in 2021 were not insured. Those affected must bear the financial losses themselves, or rely on aid. This insurance gap has declined over the last few decades in industrialised countries, whereas in poorer countries it remains unchanged at over 90%.
In industrialised countries, the proportion of insured losses depends on the particular natural hazard concerned. For example, in the USA and Europe, insurance density is much lower for floods than for storms. Some infrastructure in the USA is insured, while this is seldom the case in Europe.
“Greater insurance density can help people and countries to better cope with the financial consequences of a disaster and help them return to a normal life. Developing concepts in partnership with governments (public-private partnerships) certainly makes sense,” explains Ernst Rauch.
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