Willis warns that while natural catastrophe (NatCat) losses in 2025 were lower than the previous year, the insurance industry must not be lulled into a false sense of security. Insured losses from natural catastrophes exceeded US$100 billion in 2025 for the sixth consecutive year, according to the Natural Catastrophe Review published by Willis, a WTW business. Despite a decrease of US$40 billion compared with 2024, the figures highlight the continued severity of global risks, particularly as they occurred without a single hurricane making landfall in the US. The review identifies several structural pressures, including the rise of wildfire as a core contributor to portfolio volatility. Willis notes that pricing can no longer rely on historical data alone and must be adjusted to account for prolonged droughts and urban expansion into high-risk zones. The report also highlights the emergence of "compound perils," where multiple events occur in quick succession, and the changing behaviour of North Atlantic hurricanes due to warming sea temperatures. Additionally, pluvial flooding, which is intense rainfall that overwhelms drainage systems far from traditional flood zones, is cited as a burgeoning risk for risk managers to monitor. Cameron Rye, director of natural catastrophe analytics at Willis Re, says: “Good luck is no substitute for sound strategy. Even if 2025 can be described as a moderate loss year, catastrophe risk remains high, and physical risks continue to increase as the world warms”. Rye adds that insurers should act now to protect portfolios against unsustainable accumulations of risk. “The path forward given these trends isn’t to walk away from risk, but instead to encourage investment in resilience and mitigation. Risk managers and sustainability teams can protect business value by working together, supported by advances in modelling, pricing and risk awareness”. Scott St. George, head of weather and climate research at the Willis Research Network, comments that a "risk floor" for catastrophic perils is now higher than ever. “Beyond the immediate headlines, our team of experts digs into the structural pressures, overlooked warning signs, and systemic vulnerabilities that multiplied the impact of natural catastrophes in 2025,” St. George concludes.
