Catastrophes spanning wildfires in Los Angeles to severe storms across other parts of the US are set to drive this year’s overall insured losses well above the historical average for the industry, according to Munich Re.
Natural disasters across the globe have already led to US$80 billion ($103.10 billion) of insured losses in the first half of the year, with fires in and around the LA area in the first weeks of 2025 accounting for half the total, the reinsurer said in a report on Tuesday.
And if history is any guide, the remaining months of 2025 will see even bigger losses as the US hurricane season unfolds, according to Tobias Grimm, Munich Re’s chief climate scientist.
Not since 2011, when a tsunami rammed into Japan and triggered a nuclear meltdown at the Fukushima Daiichi Nuclear Power Plant, have first-half insured losses stemming from natural catastrophes been greater.
When including losses that weren’t insured, the figure swells to US$131 billion in the period, Munich Re said. That’s “significantly higher” than the average for the previous decade, it said.
Munich Re pointed to the “well established consensus” among scientists that climate change makes many weather-related disasters more frequent and severe. Against that backdrop, annual insured losses are regularly breaching US$100 billion, something that used to be a rare event but is now the “new normal”, Grimm said.
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In LA, wildfires that incinerated entire neighborhoods in January were among the most destructive in California’s history. The overall losses and insured losses tied to the fires were almost double those seen in 2018, which until now had been the costliest wildfire year, Munich Re said.
Climate change “wasn’t the cause of the wildfires, but it did contribute to their devastating impact in LA”, Grimm said.
Severe storms, including tornado outbreaks across a number of US states in March, April and May, caused US$14.6 billion of insured losses in the first half, Munich Re said. In Europe, severe thunderstorms in France, Austria and Germany in June drove the region’s biggest insured losses, it said.
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Grimm said the growing risks associated with natural disasters add to the likelihood that so-called risk-adequate premiums will go up.
“Munich Re continues to have an appetite for insuring losses from natural catastrophes,” he said. “This is one of the areas in which we want to grow.”
