Insured cat losses top $100 billion for sixth straight year

Insured losses from natural catastrophes reached $107 billion in 2025, the sixth consecutive year above $100 billion, Swiss Re Institute reported in March 2026. The industry absorbed the bill without a major US hurricane landfall.

Swiss Re Institute puts a return to trend at $148 billion for 2026 and a peak-loss year at around $320 billion. The trend figure is roughly $41 billion above the 2025 total; the peak scenario is about three times it.

For an allocator buying cat bonds or collateralized reinsurance, the adjustment a manager makes to a licensed catastrophe model is where its view of risk sits. Karen Clark, chief executive and co-founder of Boston-based Karen Clark & Company, said most carriers now license one model and adjust it toward a proprietary view of risk, Insurance Business America reported. Which model a firm licenses, what it changes and who signs off are the questions that separate one manager's risk view from another's.

Clark said some primary insurers price catastrophe exposure through models they do not license directly, leaning on reinsurance brokers to explain what the models say. KCC is one of the three main catastrophe model vendors whose wildfire models California's Department of Insurance reviewed and approved in 2025.

A decade ago many companies, reinsurers especially, ran several models side by side, Clark said, until cost collided with low confidence in first-generation wildfire results. "What's the point of adding that cost of having multiple models if we're not really seeing the benefit in terms of better loss estimates?" she said. Clark expects reinsurers, the heaviest licensors, to say they run no model as delivered; they have to develop their own proprietary view of risk, she said.

Peter Bingenheimer, global head of business development for the Catastrophe and Risk Solutions team at Verisk, said the industry should manage to what will happen rather than to what has happened over the past handful of years. He said Verisk estimates that frequency perils such as wildfire drive about two-thirds of global average annual loss, and that the recent run of moderate catastrophe years reflects luck rather than lower underlying risk.

Firas Saleh, director of wildfire and flood models for North America at Moody's, drew a parallel to Hurricane Andrew, which he said exposed the limitations of relying primarily on historical loss experience and helped increase demand for probabilistic catastrophe modeling. Wildfire and cyber are creating similar pressure, he said in written responses to Insurance Business, because historical experience alone is increasingly insufficient, though both risks are also highly dynamic.

The 2025 total lands between Swiss Re's trend estimate and its peak scenario, which is the range a cat bond or collateralized reinsurance investor is underwriting every time a deal prices. The model a manager licenses is the starting point; the adjustment is the position.