Insured losses from natural catastrophes reached $107 billion in 2025, marking the sixth consecutive year above the $100 billion threshold, according to Swiss Re Institute - a 24% decline from the record $141 billion recorded in 2024, but achieved without a single hurricane making landfall in the United States. Willis has warned that the apparent respite masks a structurally higher risk floor and more complex loss patterns, with risk management frameworks struggling to keep pace.
That structural backdrop frames the findings of the eighth edition of Global Insurance Law Connect's Risk Radar report, drawing on contributions from 26 member firms across 28 jurisdictions. The report finds that compliance requirements, climate-related claims and technology risks are converging into a more demanding operating environment for insurers in 2026 - with pressure on multiple fronts simultaneously rather than sequentially.
Global catastrophes in 2025 caused approximately $224 billion in total economic losses, with insured losses of around $107-108 billion according to market estimates from Swiss Re and Munich Re respectively. So-called secondary perils - including wildfires and severe convective storms - dominated the insured loss landscape, underscoring the view that these non-peak perils should no longer be classed as secondary at all.
The 2025 loss total was driven primarily by the Los Angeles wildfires in the first quarter, which generated $40 billion in insured losses - the costliest wildfire event in global insurance history - and severe convective storms, which contributed an additional $50 billion.
The GILC review identifies flood, storm, wildfire and catastrophe exposures as placing pressure on underwriting, pricing, reinsurance arrangements, product design and the affordability of cover across multiple jurisdictions. In Australia, the Insurance Council of Australia's updated data shows extreme weather losses surging alongside higher average claim costs and significant pressure on supply chains, with Munich Re recording A$4.8 billion in insured weather losses during 2025. Austria recorded €1.7 billion in insured natural catastrophe losses during 2024 - the highest level reported for that market - with insured losses from natural disasters now exceeding €1 billion annually on average. The 2024 Central European floods alone produced €550-650 million in Austrian domestic losses and pushed the federal disaster fund to €1 billion. Spain experienced its own landmark event in the Valencia DANA, which the report's Spanish contributors describe as producing very large volumes of property, motor and business interruption claims while simultaneously testing loss-adjusting capacity, policy wording and public communication at scale.
The Asia-Pacific protection gap illustrates the challenge at its most acute. Natural catastrophes generated at least $76 billion in economic losses across the region in 2025, while only around 10% of those losses were insured - a ratio that reflects both the scale of unprotected exposure and the difficulty of extending affordable cover in high-risk markets.
Across multiple jurisdictions, the GILC review found insurers facing higher expectations around operational resilience, governance, conduct, customer protection and supervisory oversight - with regulatory attention focused not only on new rules but on insurers' ability to demonstrate practical implementation in real time.
Australia provides one of the starkest illustrations of the compliance burden. The ICA's November 2025 report quantified compliance costs at A$2.5-3.5 billion annually, or 4-6% of gross written premium, with more than 30,000 obligations enforced by 25 authorities. While APRA and ASIC identified more than 400 deregulation initiatives, material reforms - including CPS 230 operational resilience, the Financial Accountability Regime and new climate-related disclosures - continue to drive heavy compliance demands. Matt Ellis, partner at Sparke Helmore, the report's Australian contributor, said continued reform across operational resilience, individual accountability and AI governance appeared likely to hamper initiatives to ease the regulatory burden at least in the short term.
Across Europe, Austrian insurers face what the report's contributors from Völkl Rechtsanwälte describe as an unprecedented wave of EU regulation in 2026 - DORA, which has required comprehensive ICT risk management, incident reporting and resilience testing since taking effect in January 2025; the EU AI Act, which classifies AI systems used for risk assessment and pricing in life and health insurance as high risk from August 2026; and new resolution rules under the IRRD. Germany's BaFin issued a new circular in April 2026 confirming that ransom insurance remains permissible when bundled with cyber insurance under certain conditions - a ruling the report's German contributors at Arnecke Sibeth Dabelstein describe as eagerly awaited, noting that a ban would have placed German insurers at a competitive disadvantage. Brazil's New Insurance Law, which came into force in December 2025, is adding further complexity, introducing changes that reduce contractual autonomy, create atypical rules for reinsurance and claims handling, and expand the potential for long-tail liabilities.
Beyond weather and regulation, the review found cyber exposures and AI adoption creating compounding complexity. AI, automation and digital distribution models are being used across underwriting, fraud detection and claims management - but the GILC contributors consistently flag governance, data quality, outsourcing arrangements, bias and security as concerns that regulators are beginning to formalise.
In Australia, ransomware persists as the leading cyber threat vector, with 70% of attacks in 2026 involving double extortion, according to Sparke Helmore's market analysis. Insurers are responding by developing specialised affirmative policies addressing AI-driven risks such as model drift. In the UK, the report's Beale & Co contributors identify AI-enabled threats - including deepfakes, AI-powered phishing and audio and video fraud - as becoming more sophisticated and costly, with many AI-related risks such as hallucinated outputs and model manipulation remaining only partially addressed in policy wordings. A Central Bank of Ireland survey from February 2025 found that 94% of Irish insurance firms expected to use AI within three years, particularly in claims management, pricing, underwriting and customer service.
The combination of elevated catastrophe losses, mounting compliance costs and evolving cyber exposures is the defining feature of the 2026 operating environment. As Gillian Davidson, chair of Global Insurance Law Connect, notes in the report's introduction: "In many markets, 2026 will be defined not just by the arrival of new rules, but also by regulators' insistence that insurers can demonstrate practical implementation in real time."
