Catastrophic weather events globally tallied up to a staggering 116 billion euros in damages during the initial six months of 2025
Record Breaking Insurance Losses in 2025 Due to Climate-Related Disasters
Insurance bills are on the rise, with a significant increase in losses due to climate-related disasters in 2025. According to Swiss Re, global insured losses for the full year are expected to exceed $150 billion, following around $80-100 billion in the first half of the year alone.
The main drivers behind this increase are unprecedented wildfires and severe storms. The Los Angeles County wildfires in January 2025, for example, caused an estimated $40 billion in insured losses, making them the largest-ever insured wildfire loss events to date.
The rise in wildfire losses over the past decade can be attributed to several factors, including increasing temperatures, more frequent droughts, changing rainfall patterns, suburban expansion, and high-value asset concentration in vulnerable areas. As a result, wildfire-related insured losses have increased from about 1% of all natural catastrophe claims before 2015 to 7% more recently.
Severe convective storms, including hail and tornadoes, also contributed around $31 billion in insured losses in the first half of 2025. However, these losses were somewhat below the trend of recent years.
The first half of 2025 has seen a significant rise in insured losses compared to previous years, with the total insured losses reaching $104.5 billion. This total exceeds the ten-year average by 36%.
The costs of climate disasters, including fires and severe storms, are expected to continue increasing, potentially leading to higher insurance bills in the future. With rising temperatures, more frequent droughts, and changes in rainfall patterns, fires now account for 7% of insured losses.
In addition to natural disasters, human-induced losses, such as industrial accidents, amounted to $87 billion in the first half of 2025, up from $69 billion in the same period of 2024.
The economic losses due to natural disasters worldwide in the first half of 2025 were $135 billion (€116 billion), according to Swiss Re. The insurance bill is expected to increase in 2025 to cope with the rising cost of climate disasters.
The second half of 2025 is expected to be more costly for insurers due to damage during the Atlantic North's hurricane season. The Swiss reinsurance giant, Swiss Re, referred to the fires as having an "exceptional severity".
In summary, the increased insurance bills for fires can be largely attributed to the impacts of climate change, urban sprawl, and the concentration of high-value assets in vulnerable areas. The costs of climate disasters, including fires and severe storms, are expected to continue increasing, potentially leading to higher insurance bills in the future.
- The rise in insurance bills can be partly attributed to losses from climate-related disasters, such as wildfires and severe storms, in the field of environmental science.
- Climate-change, which has led to increased temperatures, droughts, and changes in rainfall patterns, is causing a higher percentage of insured losses from wildfires in the environmental-science sector.
- In light of these rising insurance bills, the finance industry is expected to play a vital role in managing wealth and real-estate investments to accommodate the increasing cost of climate-related disasters.
- With the housing market and personal finance sector also affected by climate disasters, budgeting and home insurance will become essential for residential property owners.
- As climate-change continues to impact industries, investing in energy sectors that focus on sustainable and renewable resources could be a strategic move for financial portfolios.
- The insurance industry is coping with the climbing cost of climate disasters by raising rates and adapting strategies to mitigate damage in vulnerable areas, like urban planning and zoning regulations.
- It's crucial for individuals and businesses to invest in environmental-science research and development to combat climate-change, reduce the risk of these disasters, and lower future insurance bills.
