The global insurance industry did not get a quiet year in 2025. It got a year without a US landfalling hurricane that still produced more than $100 billion in insured losses, for the sixth consecutive year.
That figure opens Verisk's 2026 Global Modeled Catastrophe Losses report. The report's central finding: the industry should be prepared to withstand $171 billion in insured catastrophe losses in an average year. That is up $19 billion from Verisk's prior estimate and the highest figure the company has published. When Verisk first released this annual benchmark in 2012, the equivalent number stood at $59 billion.
The average annual loss (AAL) is not a forecast for any single year. It is a long-term modeled benchmark derived from simulations across Verisk's global suite of catastrophe models across more than 120 countries and regions.
The most instructive aspect of 2025 is not its final tally but what produced it. With no major US hurricane landfall, losses were led by the Eaton and Palisades wildfires and a sustained run of severe thunderstorm events. Each thunderstorm event averaged $771 million in insured losses. Verisk notes both fell within the modeled range.
The 10-year average annual insured loss stands at $134 billion. The five-year average is $139 billion. Both sit well below Verisk's modeled AAL: the number the industry must be prepared to withstand not in a bad year, but on average.
Severe thunderstorm accounts for 40% of global insured AAL, more than any other peril. Tropical cyclone follows at 27%, ahead of earthquake at 10%, winter storm at 9%, flood at 7%, and wildfire at 6%.
Of the $171 billion global total, $117 billion (68%) is attributed to the US. Severe convective storm activity drove US insured losses above $50 billion for three consecutive years, according to data from the Insurance Information Institute (Triple-I).
The shift is important for underwriting. A quiet hurricane season no longer serves as a reliable signal of low catastrophe activity. Frequency perils now define the baseline loss environment, and their aggregate cost compounds across a full year in ways a single landfalling storm does not.
Verisk identifies four drivers of the rising AAL: near-present climate modeling, demand surge, site-specific risk precision, and exposure growth. The last of these operates independently of weather.
Global property exposure in Verisk-modeled countries grew approximately 7% per year from 2021 to 2025. New construction contributed 2.8% annually. Price inflation added 4.2%.
In the US, residential reconstruction costs grew at 5% each year over the same period. Overall consumer price inflation ran at 4.4%, according to Verisk's analysis of its 360Value reconstruction cost data and Federal Reserve Bank of St. Louis CPI data.
A 3.3% annual increase in reconstruction costs alone would produce a 38% increase in losses over a decade, with no change in catastrophe activity. Replacement values set several years ago are likely understated for most property portfolios.
Demand surge compounds this. When a catastrophe generates a surge of claims, material and labor costs spike as post-event demand outpaces supply. Verisk estimates demand surge contributes 10% ($15.7 billion) to the global modeled AAL. For US tropical cyclone events, demand surge can increase the AAL by 13%. At a 100-year return period, that figure rises to 23%.
The $171 billion AAL covers only insured losses. Global economic losses from natural catastrophes are estimated at more than $450 billion annually. Insured losses cover roughly 38% of the total.
That ratio varies by region. In North America, approximately 53% of economic catastrophe losses are insured. In Europe, the figure is 22%. In Asia, it is 14%.
The July 2025 Central Texas floods illustrated what a low take-up rate produces in a mature market. The national flood insurance take-up rate stands at just 3%. In Kerr County, it was 2.5%. Most of the $1.1 billion in residential economic losses fell on households. More than 130 people died in the event, the deadliest flash flood in nearly five decades, according to Verisk.
Europe presents a parallel problem. Verisk estimates $110 billion in expected annual economic catastrophe losses across the region, against $24 billion in insured losses.
Australia's Tropical Cyclone Alfred in 2025 produced a roughly 25% protection gap. State levies and elevated rebuilding costs suppressed take-up despite the federal cyclone reinsurance pool.
The report extends beyond the AAL to exceedance probability (EP) metrics. At a 100-year return period, aggregate modeled insured losses reach $477 billion globally. At 250 years, the figure is $606 billion. North America accounts for $433 billion of the 100-year figure.
Verisk's modeled AAL has risen from $87 billion in 2021 to $171 billion in 2026. Each of the four identified drivers has pushed it higher, independent of any single event. The question the report poses is one the industry is already debating: what does a year like 2025 look like with a major US landfalling hurricane added to it?
