Natural catastrophes are forecast to cost the world an average of $450 billion each year, according to new research from risk-modelling firm Verisk. This figure highlights a substantial protection gap, as less than half of these losses are typically covered by insurance. Specifically, approximately 62% of global losses from natural disasters remain uninsured, meaning homes, businesses, and governments face an average of $279 billion in uninsured losses annually, a figure that can escalate significantly in particularly severe years.
Verisk's 2026 Global Modeled Catastrophe Losses Report indicates that global insured catastrophe losses are expected to average $171 billion annually, an increase of $19 billion from the previous year and the highest estimate Verisk has ever reported. This increase occurred despite a year without any U.S. hurricane landfalls for the first time in a decade, primarily driven by rising property and insured values worldwide. The United States accounts for the majority of this risk, with $117 billion (68%) of the global insured average annual loss attributed to the U.S.
For the sixth consecutive year, global insured catastrophe losses surpassed $100 billion in 2025. These losses were not primarily caused by high-severity perils like earthquakes and hurricanes but rather by record-setting wildfires and widespread severe thunderstorm activity, which includes hail, wind, and tornado damage. Severe thunderstorms alone account for 40% of the modeled insured catastrophe risk, making it the largest contributor to Verisk's global insured average annual loss, ahead of tropical cyclone (27%), earthquake (10%), winter storm (9%), and wildfire (6%).
The report also illustrates the potential for much higher losses in extreme scenarios. A severe catastrophe year could lead to losses nearly three times higher than the global insured average annual loss. For instance, at a 100-year return period (a 1% annual likelihood), modeled aggregate insured losses could reach $477 billion. This rises to $606 billion at a 250-year return period. The report quantifies the global protection gap at 62% for economic losses, meaning that out of a modeled economic average annual loss of over $450 billion, only about 38% is insured.
This trend of increasing losses is exacerbated by climate change and urban sprawl. In 2025, economic losses from natural catastrophes were $220 billion, with $107 billion insured. Key events included the Palisades and Eaton fires in Los Angeles, which caused $40 billion in insured losses, making them the costliest global insured wildfire events to date. Without these fires, 2025 would have been the least costly year for insurers since 2016. However, experts from Munich Re and Swiss Re concur that while individual year-to-year volatility exists, the upward trend in insured losses is structural due to increasing exposure and the amplified frequency and severity of weather-related events influenced by climate change.
