Insured losses hit $127b as convective storms beat cyclones

The Myanmar earthquake was the deadliest global event except for heatwaves.

Insurers are expected to face continued pressure from frequent, mid-sized catastrophe events, with severe convective storms (SCS) now seen as the main driver of future insured losses, according to Aon’s 2026 Climate and Catastrophe Insight report. 

Globally insured losses reached $127b last year, higher than the long-term average since 2000 of $99b and 47% more than the median of the same period ($86b).

“The Myanmar earthquake was the deadliest global event except for heatwaves, with $15.7b in economic losses. Flooding in China and cyclones in South and Southeast Asia also drove significant losses. Australia experienced two billion-dollar insured loss events,” the report said.

The firm said SCS have overtaken tropical cyclones as the costliest insured peril of the 21st century, and this pattern is likely to persist as high-frequency storms in the United States continue to generate large, recurring claims. 

In 2025 alone, SCS caused $61b in insured losses globally, the third-highest on record, signalling that loss volatility is becoming a structural issue for the insurance and reinsurance markets 

Aon said the industry should also expect insured losses to remain above $100b a year, even in years with lower overall disaster activity. 

Global economic losses from natural disasters totalled $260b in 2025. 

The gap between economic and insured losses narrowed to 51%, the lowest on record, mainly because of heavy loss concentration in highly insured markets such as the United States, which accounted for 81% of global insured losses. 

This suggests future growth in claims will continue to be driven by developed markets, whilst protection gaps in emerging economies remain wide 

Wildfire and heat-related risks are also expected to weigh more heavily on insurers’ portfolios. 

The Palisades and Eaton Fires in California produced $41b in insured losses in 2025, the highest ever for wildfires, reinforcing expectations that secondary perils will remain a key source of accumulation risk. 

Aon said climate trends point to more frequent medium-scale events rather than a small number of extreme catastrophes, with $30b insured loss events recorded in 2025, well above the long-term average of 17. 

This raises concerns about capital strain, pricing adequacy and reinsurance capacity going forward The report also expects wider use 

of alternative risk transfer and parametric insurance as insurers and governments look for faster liquidity and additional capital.