Severe Convective Storms Emerge as the Most Expensive Insured Risk of the 21st Century: Insights from Aon

Severe convective storms (SCS) have overtaken tropical cyclones as the costliest insured peril of the 21st century, according to a report from Aon plc. Total economic losses reached a staggering $260 billion, which is 23% below the 21st-century average and the lowest figure since 2015, as detailed in Aon’s 2026 Climate and Catastrophe Insight report. This figure includes both insured loss claims and broader economic losses.

Despite the overall decline in economic losses, Aon warns that the year told a different story beneath the surface. Insured losses soared to $127 billion, marking a 27% increase above the long-term average. This highlights how concentrated and severe events can significantly reshape the global loss landscape, even during years with below-average hazard levels.

“While insured losses declined slightly from 2024, the long-term trend is clear: Weather exposures are rising,” commented AON CEO Greg Case in the report’s forward. Notably, 2025 marked the sixth consecutive year where insurance payouts exceeded $100 billion.

In contrast to a busy first half, catastrophe activity losses were subdued in the third quarter, falling about 25% below average in the fourth quarter. Aon attributed this to the absence of hurricane landfalls in the U.S. and a general pause in Atlantic storm activity during the peak season.

The global insurance protection gap narrowed to 51%, the lowest on record, largely due to the concentration of losses in the U.S., which accounted for 81% of global insured losses. This gap represents the difference between economic losses from natural disasters and the amount covered by insurance.

Key findings from the report include:

• SCS accounted for $61 billion in insured losses globally in 2025, the third-highest total on record.
• Thirty insured loss events exceeded $1 billion during 2025, far above the historical average of 17, emphasizing the accumulation effect of increasingly frequent medium-sized catastrophes.
• Nearly 50 billion-dollar economic-loss events (49) occurred in 2025, surpassing the long-term average of 46.
• Wildfires in California, specifically the Palisades and Eaton Fires, were the costliest events, resulting in $58 billion in economic losses and $41 billion in insured losses, making them the most expensive wildfires ever recorded globally.
• Global fatalities totaled 42,000, primarily driven by earthquakes and heatwaves, which is 45% below the 21st-century average. The Myanmar earthquake was the deadliest event apart from heatwaves, claiming 5,456 lives.
• Extreme heat caused over 25,000 deaths globally, remaining a major driver of natural-disaster-related fatalities, as 2025 ranked as the third-hottest year on record.
• Events leading to economic losses above $10 billion included the Palisades and Eaton Fires, the mid-March SCS outbreak in the U.S., seasonal flooding in China, the Myanmar earthquake, and Hurricane Melissa in the Caribbean. Notably, there were no such events in EMEA for the first time since 2020.
• SCS and wildfires were the only perils in 2025 that exceeded their long-term loss averages for economic losses.

Regional trends highlighted in the report include:

• United States: Over 54% of global economic losses occurred in the U.S., with above-average losses driven by wildfires and SCS. Insured losses reached $103 billion, representing 81% of global industry losses.
• Americas: Hurricane Melissa was the region’s costliest event, with $11 billion in economic damages and $2.5 billion in insured losses across Jamaica, Cuba, and other areas. South America faced significant drought impacts, particularly in Brazil, leading to approximately $5 billion in agricultural losses.
• EMEA: Natural disasters in this region resulted in at least $21 billion in economic losses, significantly below the 21st-century average of $54 billion, marking the lowest loss since 2006.
• APAC: The Myanmar earthquake was the deadliest global event aside from heatwaves, with $15.7 billion in economic losses. Flooding in China and cyclones in South and Southeast Asia also contributed to significant losses.

Alternative Risk Transfer Solutions

The Aon report emphasizes that alternative risk transfer is becoming increasingly vital for providing the necessary capital to help organizations mitigate risk and enhance resilience. For instance, the Jamaican government secured over $650 million in liquidity less than two months after Hurricane Melissa, including $91 million from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and $150 million from a World Bank-supported catastrophe bond.

Parametric insurance products, which automatically release funds when specified triggers are met, proved essential during events like Hurricane Melissa by facilitating rapid payouts. The report advocates for increased resilience through smarter technology, stronger infrastructure, and better forecasting to reduce long-term damage and expedite recovery.

“A data-driven approach not only advances resilience but also ensures businesses remain competitive in an ever-evolving risk landscape,” stated CEO Case. “Resilience today must be both physical and financial,” added Michal Lorinc, head of Aon’s catastrophe insight.

Organizations are encouraged to integrate adaptation into their strategies, invest in predictive analytics, and foster cross-functional approaches to weather risk. As climate events continue to impact communities, leveraging data can enhance preparedness and support faster recovery.

Source: Aon

Photograph: The Eaton Fire burns a residence Wednesday, Jan. 8, 2025 in Altadena, Calif. (AP Photo/Ethan Swope, File)

Topics
Windstorm
Aon

Severe convective storms (SCS) have overtaken tropical cyclones as the costliest insured peril of the 21st century, according to a report from Aon plc. Total economic losses reached a staggering $260 billion, which is 23% below the 21st-century average and the lowest figure since 2015, as detailed in Aon’s 2026 Climate and Catastrophe Insight report. This figure includes both insured loss claims and broader economic losses.

Despite the overall decline in economic losses, Aon warns that the year told a different story beneath the surface. Insured losses soared to $127 billion, marking a 27% increase above the long-term average. This highlights how concentrated and severe events can significantly reshape the global loss landscape, even during years with below-average hazard levels.

“While insured losses declined slightly from 2024, the long-term trend is clear: Weather exposures are rising,” commented AON CEO Greg Case in the report’s forward. Notably, 2025 marked the sixth consecutive year where insurance payouts exceeded $100 billion.

In contrast to a busy first half, catastrophe activity losses were subdued in the third quarter, falling about 25% below average in the fourth quarter. Aon attributed this to the absence of hurricane landfalls in the U.S. and a general pause in Atlantic storm activity during the peak season.

The global insurance protection gap narrowed to 51%, the lowest on record, largely due to the concentration of losses in the U.S., which accounted for 81% of global insured losses. This gap represents the difference between economic losses from natural disasters and the amount covered by insurance.

Key findings from the report include:

• SCS accounted for $61 billion in insured losses globally in 2025, the third-highest total on record.
• Thirty insured loss events exceeded $1 billion during 2025, far above the historical average of 17, emphasizing the accumulation effect of increasingly frequent medium-sized catastrophes.
• Nearly 50 billion-dollar economic-loss events (49) occurred in 2025, surpassing the long-term average of 46.
• Wildfires in California, specifically the Palisades and Eaton Fires, were the costliest events, resulting in $58 billion in economic losses and $41 billion in insured losses, making them the most expensive wildfires ever recorded globally.
• Global fatalities totaled 42,000, primarily driven by earthquakes and heatwaves, which is 45% below the 21st-century average. The Myanmar earthquake was the deadliest event apart from heatwaves, claiming 5,456 lives.
• Extreme heat caused over 25,000 deaths globally, remaining a major driver of natural-disaster-related fatalities, as 2025 ranked as the third-hottest year on record.
• Events leading to economic losses above $10 billion included the Palisades and Eaton Fires, the mid-March SCS outbreak in the U.S., seasonal flooding in China, the Myanmar earthquake, and Hurricane Melissa in the Caribbean. Notably, there were no such events in EMEA for the first time since 2020.
• SCS and wildfires were the only perils in 2025 that exceeded their long-term loss averages for economic losses.

Regional trends highlighted in the report include:

• United States: Over 54% of global economic losses occurred in the U.S., with above-average losses driven by wildfires and SCS. Insured losses reached $103 billion, representing 81% of global industry losses.
• Americas: Hurricane Melissa was the region’s costliest event, with $11 billion in economic damages and $2.5 billion in insured losses across Jamaica, Cuba, and other areas. South America faced significant drought impacts, particularly in Brazil, leading to approximately $5 billion in agricultural losses.
• EMEA: Natural disasters in this region resulted in at least $21 billion in economic losses, significantly below the 21st-century average of $54 billion, marking the lowest loss since 2006.
• APAC: The Myanmar earthquake was the deadliest global event aside from heatwaves, with $15.7 billion in economic losses. Flooding in China and cyclones in South and Southeast Asia also contributed to significant losses.

Alternative Risk Transfer Solutions

The Aon report emphasizes that alternative risk transfer is becoming increasingly vital for providing the necessary capital to help organizations mitigate risk and enhance resilience. For instance, the Jamaican government secured over $650 million in liquidity less than two months after Hurricane Melissa, including $91 million from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and $150 million from a World Bank-supported catastrophe bond.

Parametric insurance products, which automatically release funds when specified triggers are met, proved essential during events like Hurricane Melissa by facilitating rapid payouts. The report advocates for increased resilience through smarter technology, stronger infrastructure, and better forecasting to reduce long-term damage and expedite recovery.

“A data-driven approach not only advances resilience but also ensures businesses remain competitive in an ever-evolving risk landscape,” stated CEO Case. “Resilience today must be both physical and financial,” added Michal Lorinc, head of Aon’s catastrophe insight.

Organizations are encouraged to integrate adaptation into their strategies, invest in predictive analytics, and foster cross-functional approaches to weather risk. As climate events continue to impact communities, leveraging data can enhance preparedness and support faster recovery.

Source: Aon

Photograph: The Eaton Fire burns a residence Wednesday, Jan. 8, 2025 in Altadena, Calif. (AP Photo/Ethan Swope, File)

Topics
Windstorm
Aon