Zurich (AFP) – Global economic losses from natural disasters are projected to have dropped by 33 percent to $220 billion in 2025, despite the damage wrought by the Los Angeles wildfires, reinsurer Swiss Re said Tuesday. The total cost of insured losses from natural catastrophes is estimated at $107 billion, down 24 percent from the previous year, the Zurich-based reinsurance giant said in its preliminary estimates for 2025. The decrease was attributed to a much less severe hurricane season in the North Atlantic than in 2024, said Swiss Re, which serves as an insurer of insurance companies.
“For the first time in 10 years, none of these hurricanes made landfall on the US coast, which explains why insured losses from this peril are set to be low in 2025,” Swiss Re said in a statement. Nonetheless, 2025 marks the sixth year that insured natural catastrophe losses are set to exceed $100 billion. This year’s hurricane season saw 13 named tropical storms, including three Category 5 hurricanes: Erin, Humberto, and Melissa. The most costly storm in 2025 was Hurricane Melissa, which devastated Jamaica and affected Haiti and Cuba, with insured losses estimated at $2.5 billion, according to the Swiss reinsurer.
With wind gusts reaching 298 kilometres per hour, the Category 5 hurricane caused significant flooding and landslides, with Swiss Re noting that it was one of the most powerful hurricanes ever recorded to make landfall. Nevertheless, the 2025 hurricane season saw 13 named storms, including 3 Category 5 hurricanes (Erin, Humberto, and Melissa), but “for the first time in 10 years,” none of these hurricanes made landfall in the United States, which explains why the overall cost was significantly lower.
Severe storms “remain a major and persistent global loss driver,” Swiss Re said. In 2025, insured losses from storms — which can be accompanied by violent gusts, hail, tornadoes, and flooding — amounted to $50 billion, making it the third costliest year for storms after 2023 and 2024, due in particular to severe tornadoes in the United States in March and May. “We are observing a steady rise in losses from severe convective storms,” said Balz Grollimund, Swiss Re’s catastrophe perils chief. “Urbanisation in hazard-prone areas, rising asset values, higher construction costs, and factors such as ageing roofs have made these storms a key peril for insurers.”
As single events rarely result in a large insured loss, it is key for insurers to consider the cumulative effect of frequent, low-loss events, along with increasing property values and repair costs. Overall, US events account for 83 percent of global insured natural catastrophe losses. The Los Angeles blazes were the costliest-ever wildfire event globally, with insured losses of $40 billion. “The scale of destruction reflects a convergence of meteorological drivers, such as extended hot, dry conditions and strong winds, with greater exposure,” said Swiss Re, especially high-value residential areas expanding into the fringes of hazardous wildlands.
Meanwhile, Southeast Asia experienced severe river and flash-flooding events in November, specifically in Vietnam, Thailand, and Indonesia, although Swiss Re has not yet provided a loss estimate at this stage. “Strengthening prevention, protection, and preparedness is essential to protect lives and property,” said Swiss Re’s group chief economist Jerome Jean Haegeli.
© 2024 AFP
