- विज्ञापन -
The global insurance industry could be facing another financially punishing year as climate-related disasters continue to intensify. Swiss Re, one of the world’s leading reinsurance companies, has projected that insured losses from natural catastrophes in 2025 could rise to $145 billion. This would mark an increase of nearly six per cent from the $137 billion recorded in 2024. This growing figure reflects a broader pattern: insured disaster losses have been climbing steadily at an annual rate of 5 to 7 per cent in real terms, according to Swiss Re’s latest report published on April 29, 2025.
The firm noted that if current trends persist, 2025 would record the highest annual insured loss since 2017, a year remembered for the devastation caused by a series of powerful hurricanes. The $145 billion estimate is significantly above the historical averages of previous decades, highlighting the rising toll that extreme weather events are taking on insurers. As climate change accelerates the frequency and intensity of natural hazards, the financial burden on the insurance sector has become increasingly unsustainable in certain high-risk regions.
Swiss Re warned of a more alarming scenario as well. Using catastrophe risk modelling, the company stated that there is a one-in-ten chance that insured losses in 2025 could exceed $300 billion—a figure that would make it a new “peak loss” year. Such years are defined by massive losses that far surpass expected trends, with 2017 being the most recent example due to Hurricanes Harvey, Irma, and Maria. The increasing economic impact of disasters is not only reflected in insured losses. In 2024, total economic losses from natural and man-made catastrophes globally reached an estimated $318 billion. However, only 57 per cent of those losses were covered by insurance, revealing a substantial protection gap of $181 billion. This gap underscores the fact that a significant portion of the global population remains financially vulnerable to disasters.
The widening protection gap is partly driven by the growing difficulty insurers face in covering high-risk areas. As the costs of claims climb due to more frequent and intense disasters, many insurance providers are choosing to exit certain markets altogether or limit their coverage. A stark example comes from California, where recurrent wildfires have caused a major retreat by insurers. The devastating fires that swept across Los Angeles in 2024 scorched 23,000 hectares, killed at least 29 people, and destroyed over 16,000 structures. In the aftermath, more than a dozen leading insurers—representing around 80 per cent of the state’s market—either withdrew or placed restrictions on issuing new policies in the most affected zones.
These developments have created a cascading crisis for homeowners and businesses who find themselves either unable to obtain insurance or facing unaffordable premiums. Insurers, for their part, have suffered years of underwriting losses, where claims payouts exceed collected premiums, making it financially unviable to continue operations in disaster prone regions.
The Swiss Re report highlighted the strong link between insurance costs and exposure to natural hazards. In California, for instance, areas most vulnerable to wildfires also have the highest property insurance premiums. Nationally, there is a marked correlation between average catastropherelated losses per policy and the premiums charged in each state. This trend suggests that unless aggressive loss mitigation measures are adopted, large sections of the population may be priced out of insurance markets altogether.
The reinsurer emphasized that managing exposure to natural perils through improved risk reduction strategies and adaptation efforts is critical to maintaining longterm insurability. According to Swiss Re’s analysis, several significant disasters drove insured losses in 2024. These included Hurricanes Helene and Milton, a series of intense convective storms in the United States, widespread urban flooding events across multiple continents, and unprecedented insured losses in Canada due to a mix of storms, floods, and wildfires.
Canada, in particular, experienced its costliest year on record in terms of insured natural catastrophe losses, demonstrating that climate risks are not confined to traditionally vulnerable regions like South Asia or the Gulf Coast of the U.S. This trend is a reminder that insurance systems worldwide must adapt to new risk landscapes. In its conclusion, Swiss Re stressed the importance of risk-informed planning, robust infrastructure, and publicprivate cooperation in adapting to the climate crisis.
With global exposure to natural hazards on the rise, the financial ecosystem surrounding insurance needs urgent reform to remain sustainable. As 2025 unfolds, insurers and policymakers alike are watching the skies—and the data—closely. With a growing probability of high-impact disasters becoming the new normal, the insurance industry may need to reinvent itself to withstand the pressures of a warming world.
