The first quarter of 2025 saw global natural catastrophe losses reach at least US$110 billion, nearly double the 10-year average of US$55 billion for the period, according to Gallagher Re's latest Natural Catastrophe and Climate Report.
Of that total, US$56 billion in losses were covered by private insurers or public insurance entities, 176% higher than the decade-long Q1 average of US$20 billion.
The January wildfires in the Los Angeles metropolitan area significantly skewed the quarterly totals. While final figures may increase as reporting becomes more complete, the early tally marks one of the costliest starts to a year on record.
Gallagher Re noted that, despite the high losses, the insurance industry and government systems were able to absorb the financial impact without major signs of stress.
Comparatively, the first half of 2024 saw active global natural catastrophes resulting in nearly average financial costs for governments and the insurance industry. The economic loss from all natural perils reached a minimum of US$128 billion, slightly lower than the most recent 10-year H1 average of US$133 billion.
The private insurance market and public insurance entities covered at least US$61 billion of this loss, which is 25% higher than the decadal average of US$49 billion.
Excluding non-weather-related disasters such as earthquakes and volcanic eruptions, Q1 2025 represented the most expensive quarter ever recorded for weather- and climate-related events.
Gallagher Re reported that atmospheric events alone caused US$89 billion in economic damage, nearly double the 10-year Q1 average of US$46 billion. Insurers covered US$55 billion of these losses, up from the historical Q1 average of US$18 billion and more than double the US$23 billion in insured losses seen in Q1 2024.
According to Gallagher Re, despite the impact of the California wildfires, the global reinsurance sector remained well-capitalized, with an estimated US$769 billion in capital available through the end of 2024.
While the first-quarter losses are likely to influence US market renewals, they are not expected to significantly affect global renewal cycles. However, the level of losses has already consumed a meaningful portion of reinsurers’ 2025 natural catastrophe budgets.
Historically, Q1 accounts for about 14% of annual catastrophe losses, with Q2 and Q3 representing 26% and 44%, respectively. As the calendar advances into the spring and summer months, risk increases across the Northern Hemisphere, particularly in the US, where insurers will monitor severe convective storm activity, drought, and the onset of hurricane season.
Europe and Asia also move into periods of heightened exposure, including potential monsoons and other large-scale weather events.
Gallagher Re also highlighted seasonal climate projections, noting that models show a likelihood of ENSO-neutral conditions continuing into the start of the Atlantic hurricane season. There is near-equal probability of either ENSO-neutral or weak La Niña conditions by year-end. NOAA forecasts a 99.9% chance that 2025 will rank among the five warmest years on record.
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