Severe convective storms (SCS) have surpassed tropical cyclones to become the costliest insured peril of the 21st century, according to Aon's 2026 Climate and Catastrophe Insight report. The report reveals that global economic losses from natural disasters reached US$260 billion in 2025, the lowest since 2015, yet insured losses remained elevated at US$127 billion, marking the sixth consecutive year that insurance payouts exceeded the US$100 billion threshold. SCS generated US$61 billion in insured losses globally in 2025 alone, the third-highest total on record for the peril. The divergence between economic and insured losses reflects how concentrated, high-severity events, particularly in the United States, continue to drive substantial insured losses even in below-average hazard years. Wildfires in California (Palisades and Eaton Fires) were the costliest events of the year, causing US$58 billion in economic losses and US$41 billion in insured losses, making them the most expensive wildfires ever recorded globally. Insurers covered nearly half of global economic losses in 2025, leaving a protection gap of 51 per cent, the lowest on record. However, in many regions, especially emerging markets, more than half of economic losses remained uninsured. The report highlights 49 billion-dollar economic loss events in 2025, above the long-term average of 46, while 30 billion-dollar insured loss events far exceeded the historical average of 17. Global fatalities totalled 42,000, driven primarily by earthquakes and heatwaves, with extreme heat causing more than 25,000 deaths globally. The Myanmar earthquake was the deadliest event apart from heatwaves, claiming 5,456 lives. Greg Case, president and CEO of Aon, says: "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." The report notes that alternative risk transfer is increasingly critical for providing capital to help organisations mitigate risk. Parametric insurance products proved critical during events such as Hurricane Melissa, with Jamaica securing more than US$650 million in liquidity within two months of landfall through catastrophe bond protection with a parametric trigger. Michal Lorinc, head of Aon's catastrophe insight and author of the report, says: "Resilience today must be both physical and financial. 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." The 2026 Climate and Catastrophe Insight report is available here.
