The insurance industry should be prepared to withstand $171bn in insured catastrophe losses on average in a given year, according to Verisk’s 2026 Global Modelled Catastrophe Losses Report. That figure is up $19bn from a year ago, and the highest estimate Verisk has reported to date.

Increasing catastrophes, inflation, and construction costs are driving the continued rise in insured losses. Driven by the ongoing global expansion in property and insured values, the benchmark rose despite a year with no US hurricane landfalls for the first time in a decade.

Rob Newbold, president of Verisk Catastrophe and Risk Solutions, said a quiet season can mask the underlying trend.

“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,” said Newbold. “But 2025 reminds us that the underlying risk landscape has changed and years without significant losses from U.S. hurricane activity no longer signal a quieter catastrophe environment.”

Global insured catastrophe losses exceeded $100bn for the sixth consecutive year. This was driven not by severity perils such as earthquakes and hurricanes, but by record-setting wildfires and significant severe thunderstorm activity. These frequency perils generate widespread hail, wind, and tornado damage across many communities, rather than causing a single catastrophic event.

“A more dynamic risk environment underscores how catastrophe models help insurers maintain underwriting discipline and make informed pricing, capital allocation and risk transfer decisions based on the full range of risk, not just the outcome of a single season,” Newbold added.

Where the risk sits

Verisk’s global insured average annual loss (AAL) of $171bn serves as a long-term catastrophe risk benchmark, rather than a single-year forecast.

The report highlights that the United States drives the majority of this risk, accounting for 68%, or $117bn, of the global total. By peril, severe thunderstorms account for 40%, more than any other, followed by tropical cyclone at 27%, earthquake at 10%, winter storm at 9%, flood at 7%, and wildfire at 6%. The pattern held in 2025, when frequency perils, rather than a single hurricane, drove industry losses.

Extreme loss scenarios significantly exceeded the average, with modelled aggregate insured losses reaching $477bn for a 100-year event and $606bn for a 250-year event.

Since 2012, the estimated global AAL has nearly tripled from $59bn, driven by rising insured exposure, broader geographic model coverage, and updated catastrophe modelling methods.

Macroeconomic forces at work

The rising risk is heavily driven by macroeconomic and demographic forces, rather than just the number or severity of storms, wildfires, or earthquakes in a given year.

This includes growth in property exposure, which Verisk has found has expanded by roughly 7% annually since 2021 in modelled territories, due to new construction and rising asset valuations. The cost of rebuilding also keeps increasing. In the US, residential repair and rebuild costs have climbed approximately 5% per year since 2021, outpacing consumer inflation.

More people and property are also concentrated in hazard-prone areas. In England, 7.1% of single-family homes sit in a 100-year flood plain, and 1 in 9 homes built between 2022 and 2024 was placed in a flood-risk area — a share Verisk’s models project could rise to one in seven new houses by 2050.

“Together, these trends increase insured catastrophe losses independently of weather patterns and help explain why the industry’s risk benchmark continues to rise,” Verisk stated.

For the sixth consecutive year, global insured catastrophe losses surpassed $100bn, with 2025 losses settling between $107bn and $129bn due to wildfires and thunderstorms. Verisk’s analysis warns that adding major US landfalling hurricanes to a typical convective storm year could easily push annual industry losses to $200bn. For policyholders, these compounding pressures point to tighter underwriting standards and upward pressure on premiums in exposed corridors.

Dr Jay Guin, executive vice president and chief research officer for Verisk Catastrophe and Risk Solutions, said the benchmark reflects a broad range of outcomes.

“The $171 billion figure is not determined by the outcome of one hurricane season or one year of catastrophe losses,” said Guin. “It reflects a wide distribution of potential events across perils and regions, using current exposure data and a view of hazard grounded in the near-present climate. That broader perspective helps the industry prepare for loss scenarios that historical experience alone may not reveal.”

A persistent protection gap

The report also highlighted a persistent and uneven protection gap. Across the globe, only 38% of economic losses resulting from natural disasters are insured, against a modelled economic AAL exceeding $450bn.

In Europe, just 22%, or $24bn, of the $110bn in annual expected economic losses is covered. Protection gaps were equally stark in major 2025 events. During the deadly July 2025 Central Texas flash floods, regional take-up rates hovered around 3%, while a $12bn earthquake in Myanmar in March 2025 saw less than $100m in insured payouts.