Aon, a professional services firm, has published its latest Climate and Catastrophe Insight report, setting out how severe convective storms have become the most expensive insured hazard of the 21st century, overtaking tropical cyclones.
Drawing on Aon’s global data, analytics and catastrophe modelling expertise, the report explains how the rising frequency of high-impact weather events is reshaping loss trends worldwide.
Aon’s analysis emphasises that strengthening physical protections and financial structures is now central to helping organisations manage volatility, maintain access to insurance capacity and support long-term resilience.
The insurance and reinsurance broking group reports that global economic losses from natural disasters reached $260 billion in 2025, the lowest level recorded since 2015. However, insured losses remained elevated at $127 billion, extending a run of six consecutive years in which insurance payouts exceeded $100 billion.
According to Aon, this contrast reflects the continued influence of concentrated, high-severity events, particularly in the United States, which are driving substantial insured losses even in years with comparatively moderate overall hazard activity. Aon also highlights that, in many regions, especially across emerging markets, more than half of economic losses were not insured, leaving communities and businesses exposed to significant financial pressure.
The report shows that severe convective storms are now the leading source of insured losses this century, largely as a result of repeated, damaging outbreaks across the US. In 2025 alone, Aon estimates that these storms generated $61 billion in insured losses globally, making it the third-highest annual total on record for this peril.
Insurers covered close to half of all global economic losses during the year, reducing the protection gap to 51 percent, the lowest level ever observed, a result Aon attributes to the concentration of high-value events in the US. During 2025, 49 events resulted in economic losses of at least a billion dollars, while 30 events generated insured losses of a similar scale, well above the historical average.
Aon’s assessment identifies the Palisades and Eaton wildfires in California as the costliest events of 2025, with combined economic losses of $58 billion and insured losses of $41 billion, making them the most expensive wildfires ever recorded globally. Total fatalities worldwide reached 42,000, driven mainly by earthquakes and extreme heat, a figure 45 percent below the 21st-century average.
Aon notes that the Myanmar earthquake was the deadliest single disaster aside from heat-related events, resulting in 5,456 deaths. Extreme heat caused more than 25,000 fatalities globally and remained a major contributor to disaster-related mortality, with 2025 ranking as the third hottest year on record.
From a regional perspective, Aon reports that the United States accounted for more than 54 percent of global economic losses in 2025. Losses were above historical norms, driven primarily by wildfires and severe convective storms, while insured losses reached $103 billion, representing 81 percent of total global insured losses.
Across the wider Americas, Aon identifies Hurricane Melissa as the most damaging event, producing $11 billion in economic losses and $2.5 billion in insured losses across Jamaica, Cuba and neighbouring areas. In South America, prolonged drought conditions, particularly in Brazil, led to around $5 billion in agricultural losses, while flooding affected Mexico, Ecuador and Bolivia.
In Europe, the Middle East and Africa, Aon found that economic losses were well below long-term averages, with severe convective storms the largest contributor alongside impacts from drought, heat and wildfires in southern Europe. In the Asia-Pacific region, Aon highlights the Myanmar earthquake, which caused $15.7 billion in economic losses, as well as significant flooding in China and cyclone losses across South and Southeast Asia. Australia experienced two separate events that each resulted in insured losses exceeding $1 billion.
Aon’s 2026 Climate and Catastrophe Insight report also points to the expanding role of alternative risk transfer in supporting recovery and resilience. Parametric insurance solutions, which provide rapid payouts once predefined conditions are met, proved particularly effective during events such as Hurricane Melissa. Aon notes that Jamaica secured more than $650 million in liquidity within two months of landfall through catastrophe bond protection with a parametric trigger, supporting faster recovery efforts.
In addition to alternative risk solutions, Aon calls for greater investment in resilience through improved technology and infrastructure. The report stresses the value of enhanced forecasting, stronger building standards and modernised infrastructure to limit long-term damage and accelerate recovery for both communities and businesses.
“This year’s report highlights the growing need for collaboration among organizations, insurers, governments and communities,” commented Greg Case, President and CEO of Aon. “The insurance industry is well-positioned to act as a strategic partner to help navigate these challenges, bringing record levels of capital to help clients respond to weather risks and build increasingly diverse alternative risk transfer solutions to strengthen resilience in the face of a changing climate.”
“Resilience today must be both physical and financial,” added Michal Lorinc, Head of Aon’s catastrophe insight and author of the report. “Organisations are urged to embed adaptation into their workforce and location strategies, invest in predictive analytics and encourage cross-functional approaches to weather risk. As climate events continue to affect people and property, the opportunity lies in using data to strengthen preparedness, rethink risk management strategies and build partnerships that support faster recovery and long-term resilience.”
