Natural disaster losses surpass USD 110 billion in Q1 2025, closing in on twice the 10-year average

According to the latest climate and catastrophe analysis by Gallagher Re, natural disaster-related damages around the world during the first quarter of 2025 climbed past USD 110 billion. This figure is nearly double the decade-long average of USD 55 billion for the same stretch.

In the first quarter of 2025, global natural catastrophe losses totalled approximately USD 110 billion, with USD 56 billion covered by insurance. This indicates that about USD 54 billion, or roughly 49% of the losses, were uninsured. While this protection gap is narrower than the 63% observed in 2024, it still shows significant exposure to uninsured risks.

The wildfires that hit the Los Angeles metropolitan area in January have burned a hole in the pocket of the quarterly figures. These included the Palisades and Eaton Fires, which together caused over USD 65 billion in damages and more than USD 40 billion in insured losses. The Palisades Fire alone became the most expensive single wildfire ever for insurers, destroying 6 835 structures. Eaton on the other hand is responsible for reducing 9 414 structures to rubble.

Considering only one quarter of the year has passed, the initial count reflects one of the most expensive beginnings to a year in history. The report also indicated that both the insurance sector and government systems managed to handle the financial strain without showing signs of stress.

How does this compare to the previous years? In the first half of 2024, global natural disasters resulted in financial losses that were near average for both governments and the insurance industry. Total economic damages from these events reached a minimum of USD 128 billion, just below the 10-year H1 average of USD 133 billion.

The first quarter of 2025 marked a record for the highest financial impact from weather- and climate-related events. Damages from atmospheric events alone totalled USD 89 billion, nearly double the typical Q1 figure of USD 46 billion over the past decade. Insurers covered USD 55 billion of these losses, a sharp increase from the usual Q1 average of USD 18 billion and more than double the USD 23 billion in insured losses reported in Q1 2024.

For the upcoming quarters, insurers should be closely concerned with Severe Convective Storm (SCS) activity in the US. Storms alone have emerged as a leading driver of insured losses in the US. March 2025 was one of the most active months for tornadoes in US history, with 235 confirmed touchdowns. That is the highest number ever recorded for the month. Fourteen of those tornadoes were rated EF-3 or stronger. Arkansas was hit especially hard, seeing two EF-4 tornadoes for the first time since 1997.

In 2024, SCS events accounted for 41% of global insured losses and now routinely generate annual costs exceeding USD 40 billion.

The report also finds that most of the rise in SCS-related insurance losses isn’t about the weather itself. Around 80 to 90% of the increase is tied to factors like more homes built in risky areas, higher construction costs, and growing exposure as cities expand.

Wildfires remain a big money-burner for insurers. It is particularly drastic in areas where urban development meets wildlands (think cities like Austin, Texas, and St. George, Utah, for example). The report highlights that the frequency and scale of losses from these fires are increasing as more homes are built in fire-prone regions. Even with the cost of the California wildfires, the global reinsurance market is holding strong. It’s expected to have around USD 769 billion in capital available through the end of 2024.

The losses from the first quarter have already taken a considerable portion of reinsurers’ 2025 natural catastrophe budgets. This should not have an effect on the global scale, but the US market might have to bear the brunt of it. This further shows how insurance coverage for disasters isn’t evenly spread across the world.

In 2024, about 46% of losses in the US were covered. But in places like Africa and Asia, more than 85% of losses had no insurance backing at all. For instance, a M7.7 earthquake hit Myanmar on March 28 that killed thousands and damaged more than 120 000 homes. The total economic loss is estimated to be over USD 10 billion, but very little of it was insured due to limited access to coverage in the region.

In contrast, storms in more developed markets led to major insurance payouts. Storm Éowyn became the most costly windstorm ever recorded in Ireland, with losses nearing USD 275 million. In Australia, Cyclone Alfred caused heavy inland flooding in southeast Queensland, resulting in over 95 000 claims.

Decoding historical patterns tells us that catastrophe losses tend to build up as the year progresses. Q1 usually represents roughly 14% of the year’s total catastrophe losses, with Q2 and Q3 accounting for 26% and 44%. Warmer months bring a sharper rise in climate-related threats across the Northern Hemisphere. The US suffers the most from the trifecta of stronger storm systems, expanding droughts, and the early stirrings of hurricane season. The same pattern is applicable to Europe, Asia, and Africa as they prepare for monsoons.

Harsh Vardhan

My passions include trying my best to save a dying planet, be it through carpooling or by spreading awareness about it. Research comes naturally to me, complemented by a keen interest in writing and journalism. Guided by a curious mind and a drive to look beyond the surface, I strive to bring thoughtful attention and clarity to subjects across Earth, sciences, environment, and everything in between.

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