Frequency perils lead cat surge to $152bn expected insured annual cost – Verisk

The re/insurance industry should now expect average annual insured property losses from natural catastrophes of $152bn, according to Verisk’s latest global modelling report.

The “2025 Global Modeled Catastrophe Losses Report”, published by Verisk’s Extreme Event Solutions arm, signals a sharp 25% rise in non-crop property and casualty losses compared with last year.

Frequency perils such as severe thunderstorms and winter storms have cumulatively eclipsed the threat from singular mega-events, the technology firm pronounced.

Over the past five years, insured catastrophe losses have averaged $132bn, compared to $104bn in the preceding five-year period. Verisk now expects frequency perils to account for nearly two-thirds of the total modelled annual loss, around $98bn, reshaping the traditional catastrophe risk landscape.

“This year’s modelled losses reflect a fundamental shift in the risk landscape,” said Rob Newbold, president of Verisk Extreme Event Solutions.

“Frequency perils are driving sustained, high-impact losses across geographies, and insurers must evolve their strategies to meet this challenge head-on. Natural catastrophe losses are no longer statistical anomalies—they are the new normal,” he added.

Exposure growth and urban expansion

Verisk attributes much of the increase in modelled losses to rapid exposure growth, with property values in modelled countries rising 7% annually between 2020 and 2024.

Inflation and new construction in high-hazard areas are fuelling the trend, with urban expansion concentrating more valuable assets in catastrophe-prone regions.

In Europe, exposure growth averaged 8% a year over the period, the highest of any region, while Asia and Latin America each recorded around 7%. In North America, reconstruction cost inflation drove residential values higher, intensifying wildfire and severe thunderstorm losses.

The report highlights the wildfire threat in California, where the 2025 Palisades and Eaton fires caused up to $65bn in economic damage, of which 60–70% was insured.

Such events underline the growing importance of the wildland-urban interface in loss calculations, Verisk emphasised.

Protection gaps and climate signal

Verisk’s analysis shows persistent protection gaps in emerging markets.

In Asia, insurance covers only 12% of modelled economic catastrophe losses, while in Latin America the figure is 32%. North America fares better, with around 48% of losses insured, though wildfires continue to test capacity and availability.

Climate change is also contributing to the long-term trend, the paper underlined.

Verisk estimates that about 1% of year-on-year increases in modelled annual losses are attributable to climate effects, with shifts in atmospheric hazard distributions already evident in certain perils such as wildfire.

While the impact is smaller than exposure growth or inflation, Verisk warned that it is compounding volatility over time.

Modelling innovation and regulation

Verisk has introduced new inland flood models for Malaysia, Indonesia and Ireland, along with updates for Australia, Mexico, the UK, the US and South Korea.

Its US Wildfire Model has also become the first catastrophe model evaluated under California’s new PRID framework, Verisk highlighted.

The modeller said this allows insurers to incorporate cat modelling into pricing and expanding coverage in high-risk areas.

Newbold said insurers and reinsurers must adopt forward-looking models reflecting today’s climate realities.

“Our models are designed to help the industry anticipate and absorb these shocks with confidence,” he added.