In the first half of 2025, losses of $80 billion to natural catastrophes, the second most expensive in history and nearly twice the 10-year average, were recorded as insurers and insurers suffered losses statewide in California wildfires, and severe thunderstorms contributed another 31billion each, putting 2025 on a path to surpass the expected full-year claim of $150b.
California wildfires cause insurance losses never seen before in 2025
The wildfires that hit California in January added $40 billion in itself, which is the highest insured damage caused by a single incident of wildfires, as reported by CIR Magazine. Over 16,000 buildings were lost in Los Angeles County, where persistent Santa Ana winds and a lack of rainfall fueled a fast rate of fires in high-value low-density communities.
The most expensive incident in the first half was the Palisades and Eaton fires in the LA County, which combined to cost insurers up to $40 billion in early estimates. Insured losses due to wildfires have increased to approximately 7 percent of natural disaster claims post-2015, compared to just under 1 percent of natural disaster claims in the pre-2015 period, with the Swiss Re marking an increase in high-risk wildland urban interface areas development as one such factor.
If you live in these areas, you face elevated disaster risks
Another report noted insured losses of 1.5 billion, estimated, because of the magnitude 7.7 earthquake in Myanmar, which resulted in the death of approximately 3,900 people and an estimated 14 billion in economic destruction. Insured losses must have been minimal with the penetration of insurance being low in the region, but the occurrence was an eye-opener to seismic risks in areas with high population.
Swiss Re has cautioned that due to the continued North Atlantic hurricane and wildfire seasons, 2025 would see more losses than are currently expected. Traditionally, 60 percent of yearly natural disaster losses are in the second half, and hurricane season is the busiest in September, and historic warm Mediterranean waters elevate risks of flooding.
How construction costs amplify modern disaster damage totals
Construction cost inflation is up 35.6 percent since 2020, which has a direct effect on the property claim costs and adds to total losses. It is also documented that the severe convective storm activity is on the rise in particular areas, and the other reason is the vulnerability of the uncovered assets, such as solar power systems on rooftops, which have escalated at an alarming rate.
Jerome Haegeli, a group chief economist at Swiss Re, underlined the significance of mitigation and adaptation steps. The most powerful lever to make communities more resilient and safe is to invest twice in mitigation and adaptation, he said, and observed that protecting against floods with dykes, dams, and flood gates and gates is ten times cheaper than recovery.
Second-half risks threaten to exceed annual projections
Recent weather forecasts have shown that the Atlantic hurricane activity will be near to above average in 2025, and three to five major hurricanes are expected, as compared to an average of three over a long period of time. The temperatures of the Mediterranean sea surface are 3 °C higher than the average temperatures that historically occur there, and that is the hottest in history, which may give rise to even more extreme rainfalls during the autumn months, which may cause large-scale floods.
The 80 billion first-half in disaster losses is a stark reminder of a rising risk of climate disasters, most notably caused by wildfires in California, and rising exposure to severe weather patterns. Construction cost inflation and new development in hazardous areas are enhancing the overall damage costs, making 2025 potentially one of the most expensive natural disaster insurance loss years in history.