2025 Natural Catastrophe losses should not lull market into false sense of security, warns Willis

LONDON, Jan. 29, 2026 (GLOBE NEWSWIRE) -- Natural catastrophes caused more than US$100 billion in insured losses in 2025, the sixth consecutive year above that threshold, yet a decrease of $40 billion when compared with 2024. The level of losses recorded, without a single hurricane making landfall in the United States, highlights the continued severity and persistence of natural catastrophe risk.

The latest edition of the Natural Catastrophe Review published today by Willis, a WTW business (NASDAQ: WTW), with contributions from Willis Re, delves into the underlying trends, structural pressures, warning signs and systemic vulnerabilities behind climate risk.

Key takeaways include:

• Wildfire must be considered a core contributor to the volatility of insurance portfolios: pricing cannot rely exclusively on historical losses. Wildfire
  models must be adjusted to present-day conditions, use detailed asset level characteristics to supplement exposure data and apply realistic estimates for replacement costs. Prolonged drought enhanced by global warming and the continuing encroachment of communities into the wildland-urban interface has long been predicted to make catastrophic fires much more likely, but 2025 proved how severe claims can get.
  • Case study: Eaton and Palisades Fires, United States
    
• Risk modelling has to consider compound perils: cumulative damage brought on by multiple perils in quick succession (such as earthquakes on rain saturated soil, or typhoons following seismic events) can often lead to delayed claims payments and disagreements with policy holders. Disaster risk financing products can be tailored to reduce the economic impact of a sequence of catastrophic events when they happen.
  • Case study: Super Typhoon Ragasa, Philippines  
• Warming North Atlantic is changing hurricane behaviour: 2025 was the first year in a decade where no hurricanes made landfall in the US, but other places were not so fortunate. The review analyses why the Caribbean may see more Category 5 storms and for a longer season. It was previously uncommon for major hurricanes to form in October, but as the North Atlantic has warmed, the environmental conditions that are favourable to hurricane formation are lasting later in the year. That same warming also allows storms to become much stronger very quickly.
  • Case study: Hurricane Melissa, Jamaica  

• Flood risk is no longer confined to formally defined zones, and more intense rainfall than ever before is expected to accompany tropical storms: as the world continues to warm, both ends of the hydrological spectrum (flood and drought) are expected to become more intense. The second half of 2025 featured extreme or record-setting rainfall in many locations, leading to numerous cases of severe flooding in places not typically considered to be high risk. Pluvial flooding, which occurs when intense rainfall overwhelms surface drainage and causes high water in places far removed from rivers, lakes or coasts, has become a risk to watch. Risk managers ought to think broadly about their exposure to all types of high water and adjust their insurance coverage accordingly.
  • Case study: Cyclone Senyar, Cyclone Ditwah and Typhoon Koto, Southeast Asia
    

Cameron Rye, Director of Natural Catastrophe Analytics at Willis Re said: “Good luck is no substitute for sound strategy. Even if 2025 can be described as a moderate loss year, catastrophe risk remains high, and physical risks continue to increase as the world warms. Insurers should act now to protect their portfolios against unsustainable accumulations of risk and prepare for a reversal of fortune. The path forward given these trends isn’t to walk away from risk, but instead to encourage investment in resilience and mitigation. Risk managers and sustainability teams can protect business value by working together, supported by advances in modelling, pricing and risk awareness.”

Scott St. George, Head of Weather and Climate research at the Willis Research Network, said: “Even without any hurricanes making landfall in the United States, in 2025 insured losses from natural catastrophes were still over $100 billion worldwide. That tells us the risk floor for catastrophic perils is higher than ever. Beyond the immediate headlines, our team of experts digs into the structural pressures, overlooked warning signs, and systemic vulnerabilities that multiplied the impact of natural catastrophes in 2025. Our perspectives on the evolving risk landscape provide advice to insurers seeking to update their view of these risks, including the burgeoning affordability crisis in many markets.”

The full report can be downloaded here.

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