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Insurers Brace for Record Losses as Natural Disasters Surge
6 Aug
Summary
- Insured losses reach $80 billion in first half of 2025
- Wildfires in California and severe storms in US drive losses
- Forecasts indicate above-average hurricane activity for 2025
As of August 6th, 2025, the global insurance industry is bracing for a year of unprecedented losses due to a surge in natural disasters. Preliminary estimates from the Swiss Re Institute show that insured losses from natural catastrophes reached $80 billion in the first half of 2025, nearly doubling the 10-year average.
The staggering losses have been driven primarily by two major events: wildfires in California and severe thunderstorms in the United States. The Palisades Fire in Southern California alone is estimated to have caused $40 billion in insured losses, the largest ever from a single wildfire event.
Looking ahead, forecasts indicate that the second half of 2025 could be even more challenging for insurers. The report predicts "near- to above-average activity" for the hurricane season, with the potential for three to five major hurricanes - above the long-term average of three. This could push the total insured losses for the year well beyond the $150 billion projection.
The escalating climate risks have prompted insurers to retreat from high-risk zones across the US, leaving behind widening coverage gaps and exposing vulnerable communities to growing financial strain. As the industry grapples with the fallout, the need for innovative solutions and stronger risk management strategies has never been more pressing.
