Global economic losses from natural catastrophes in 2025 reached USD 260 billion, underscoring the scale of disruption. From falling water levels on the River Rhine to wildfires in California, the economic, human and operational consequences are proliferating.

According to Aon, while insured losses declined slightly from 2024, the long-term trend is clear: weather exposures are rising. The firm’s 2026 Climate and Catastrophe Insight (CCI) report, which draws on Aon’s detailed catastrophe data and forward-looking climate modelling, underscores how physical climate risk is evolving and the implications for communities, policymakers and the insurance market. Its analyses show that global economic losses from flooding exceeded USD 42 billion in 2025 and USD 2 trillion since 2000.

Drought is also emerging as a major driver of secondary perils, contributing USD 13 billion in economic losses in 2025 alone. The peril is also responsible for far-reaching secondary impacts across the economy, particularly as energy demand continues to rise.

Global disaster activity slowed in 2025, storms failed to form and economic losses dipped to their lowest level in a decade. Total losses reached USD 260 billion — 23% below the 21st-century average and the lowest since 2015. Yet beneath this quieter surface, the year told a very different story. Insured losses reached USD 127 billion, 27% above the long-term average, a reminder that even in a below-average hazard year, the concentration and severity of certain events can reshape the global loss picture.

Loss patterns revealed striking contrasts:

● 49 billion-dollar economic loss events occurred — slightly above the average of 46 — yet 30 billion-dollar insured loss events far exceeded the historical average of 17.

● Severe convective storms were the costliest peril, generating USD 61 billion in insured losses, the third highest on record.

● The Palisades and Eaton Fires were the most expensive events, causing USD 58 billion in economic losses and USD 41 billion insured.

● Global fatalities totaled 42,000, driven by earthquakes and heatwaves — 45% below the 21st-century average — with the Myanmar earthquake alone claiming 5,456 lives. It is estimated that at least 24,400 people died due to the heat in Europe during the summer.

“Flood has become an increasingly impactful natural hazard over the past three decades, and in response Aon has have developed a wide range of innovative products and coverages to help our clients recover faster and more fully from flood events. Catastrophe modelling is also an area in which we continue to make significant investment, helping to bring clarity to our clients’ flood exposures and thereby aiming to affect better business decisions”, said Michal Lorinc, head of catastrophe insight for Aon.

“Political uncertainty compounds the volatility of natural disasters. For policymakers, coordination between the public and private sectors will be increasingly important to expand coverage, invest in resilient infrastructure and use risk insights to inform planning decisions. Those that act early are better positioned to protect communities and economies over the long term”, commented Andy Neal, managing director of public sector partnership for Aon.

“Climate variability is increasingly influencing insurers’ business models, and these natural catastrophe trends point to a more structurally complex risk landscape where traditional views of risk, based only on historical experience, are no longer sufficient”, added Liz Henderson, head of climate risk advisory for Aon.

The report can be found here.