Swiss Re has released new analysis indicating that insured losses from natural catastrophes could reach $300 billion or more during peak years, driven by major hurricanes or earthquakes striking densely populated urban areas.
The year 2025 opened with wildfires in Los Angeles that generated an estimated $40 billion in insured losses.
While significant, Swiss Re emphasized that primary perils such as hurricanes and earthquakes remain the largest threat. The Swiss Re Institute said that in a peak year, insured losses could more than double the long-term average due to these events.
Swiss Re said that peak years should not be seen as anomalies. The most recent peak year, 2017, was marked by Hurricanes Harvey, Irma, and Maria. Since then, underlying risk has grown due to factors such as economic development, population growth, and urban expansion into catastrophe-prone areas. Climate change effects are also increasingly influencing loss outcomes for certain weather perils and regions.
The Swiss Re Institute estimates that if some hurricanes from the early 20th century were to occur today, the insured losses would far exceed $100 billion. For example, Hurricane Andrew caused $35 billion in insured losses at 1992 prices.
A similar event following Andrew’s path today would result in nearly three times that amount due to economic growth, rising populations, and urban development.
In contrast, while Hurricane Katrina remains the costliest single insured loss event in the re/insurance industry, the situation has shifted. Swiss Re estimates that if Katrina were to strike again today, insured losses would reach approximately $100 billion, influenced by rising construction costs.
However, improved flood defenses and a 20% decline in the local population along Katrina’s previous path have significantly reduced potential exposure.
Outside of storms and floods, other loss events are also on the radar. In Canada, the Jasper wildfire in Alberta led to the evacuation of over 25,000 people and destroyed 358 structures. This event resulted in insurance claims totaling $880 million, marking it as one of the most expensive natural disasters in Canadian history.
On Jan. 1, 2024, a magnitude 7.6 earthquake struck the Noto Peninsula in Japan, leading to substantial property damage and infrastructure disruption.
Urs Baertschi (picture above), CEO of property and casualty reinsurance at Swiss Re, said reinsurers support clients not only with risk transfer but also by providing data, risk insights, and advice on risk awareness and prevention.
Swiss Re said that the United States continues to drive a large share of catastrophe-related claims. In 2024, the US accounted for nearly 80% of global insured losses, reflecting its exposure to severe thunderstorms, hurricanes, floods, wildfires, and earthquakes.
While insurance premiums are shaped by factors such as local regulations and inflation, Swiss Re said exposure to natural perils is the dominant factor influencing claims costs and rates over the long term.
States including Florida, Texas, California, Louisiana, and Colorado accounted for about 50% of US natural catastrophe losses. Florida faces particularly high hurricane-related costs, with average household premiums double the national average, while wildfire-prone areas in California report the highest premiums in the state.
Swiss Re’s analysis suggests that mitigating risks at the outset is critical to controlling insurance costs and maintaining the sustainability of risk transfer markets. The Swiss Re Institute cited a study showing that flood defenses such as dykes, dams, and floodgates are up to ten times more cost-effective than rebuilding after disaster events.
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