Verisk Forecasts $171 Billion Annual
Analytics firm Verisk estimates the global insurance industry must now prepare for average annual catastrophe losses of $171 billion, a $19 billion
The insurance industry should brace for average annual insured catastrophe losses of $171 billion, according to analytics provider Verisk. This figure represents a $19 billion increase from the firm's estimate a year ago.
Verisk reported this as its highest estimate to date. The increase came despite 2025 being the first year in a decade without a U.S. hurricane landfall. The company stated the rise reflects continued growth in property values and insured exposures worldwide.
A Changed Risk Landscape
Rob Newbold, president of Verisk Catastrophe and Risk Solutions, warned that a quiet hurricane season can mislead markets. "A quiet hurricane season can lead markets to respond as if risk has eased: rates soften, insurers keep more risk on their own books, and more capital competes to write new business," Newbold said. He added that 2025 served as a sign that the underlying risk landscape has shifted.
Dr. Jay Guin, executive vice president and chief research officer at Verisk, emphasized the benchmark's purpose. "The $171 billion figure is not determined by the outcome of one hurricane season or one year of catastrophe losses," Guin stated. He explained it reflects a wide distribution of potential events using current exposure data and a view of hazard grounded in the near-present climate.
For the sixth consecutive year, global insured catastrophe losses surpassed $100 billion. Verisk noted this result was driven not by major earthquakes or hurricanes, but by record wildfires and significant severe thunderstorm activity. These frequency perils caused widespread hail, wind, and tornado damage across many communities.
Breaking Down the $171 Billion Benchmark
Verisk provided a detailed breakdown of its global insured average annual loss (AAL) figure. The company stressed this is not a forecast for 2026 but a benchmark for evaluating potential losses across events, perils, and regions.
| Region/Peril | Share of $171 Billion AAL |
|---|---|
| United States | 68% ($117 billion) |
| Severe Thunderstorm (SCS) | 40% |
| Tropical Cyclone | 27% |
| Earthquake | 10% |
| Winter Storm | 9% |
| Flood | 7% |
| Wildfire | 6% |
Severe thunderstorms, or severe convective storms (SCS), are now the largest contributor to the global insured AAL. The report also examined severe loss scenarios. At a 100-year return period, modeled aggregate insured losses could reach $477 billion. At a 250-year return period, losses could hit $606 billion.
Since Verisk began publishing this benchmark in 2012, the estimated global insured AAL has nearly tripled from $59 billion. The company said this change reflects expanded model coverage to over 20 additional countries, scientific advances, and growth in insured exposure.
Long-Term Trends Increasing Losses
Verisk detailed long-term trends increasing insured catastrophe losses independently of annual weather patterns. Property exposure in modeled countries has grown roughly 7% annually since 2021, driven by new construction and rising asset values.
In the United States, residential reconstruction costs have risen about 5% annually since 2021. This outpaces general inflation and increases the potential cost of losses even with unchanged hazard activity.
Population growth continues to concentrate in catastrophe-exposed regions. Development expands into flood plains and wildfire zones. In England, 7.1% of single-family homes are already in the 100-year flood plain. Verisk warned that one-in-nine new homes built between 2022 and 2024 were in flood-risk areas, a figure that could rise to one-in-seven by 2050.
The company's 2026 Global Modeled Catastrophe Losses Report uses the same catastrophe models and software as its insurance clients, covering more than 120 countries and regions.
