Natural catastrophes lead to second most expensive half-year for insurers
Keystone-SDA
The wildfires in California and storm damage have led to the second most expensive first half of the year ever for the insurance industry. Overall, insured losses in the first half of 2025 totalled around $80 billion dollars.
According to a study published by the Swiss Re Institute on Wednesday, the level of losses is more than double the ten-year average. Insured losses were only higher in the first half of 2011, which was characterised by the earthquake in Japan and the subsequent tsunami.
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The losses in the first half of 2025 now already amount to more than half of the losses of $150 billion originally forecast for the year as a whole. As natural catastrophe activity tends to increase in the second half of the year, insured losses for the whole of 2025 could exceed the forecast, according to the Swiss Re Institute.
Largest forest fire event
According to the study, the forest fires that engulfed parts of Los Angeles in January alone caused insured losses of around $40 billion. This was far more than any other wildfire loss event ever recorded. More than 16,000 buildings were destroyed in the fires – in an area with one of the densest concentrations of expensive homes in the US.
In general, damage caused by forest fires has increased significantly over the past 10 years, the study states. The reasons for this are rising temperatures, more frequent periods of drought and changing precipitation patterns with simultaneous suburban sprawl. Whereas in 2015, only 1% of all natural disaster damage was caused by forest fires, this figure has risen to 7%.
Thunderstorm damage slightly below estimates
In addition, severe thunderstorms and tornadoes caused damage totalling $31 billion in the first half of 2025. According to the Swiss Re study, however, the overall losses remained below the company’s own estimate of $35 billion.
According to the study, severe thunderstorms remain a significant driver of insured natural catastrophe losses. The financial consequences are exacerbated by factors such as urbanisation in areas at risk, increases in value and inflation: losses from this risk are therefore likely to increase.
Meanwhile, Swiss Re managers are calling for increased loss minimisation and adaptation measures. “Our studies show that flood protection measures such as dykes, dams and flood gates, for example, are up to ten times more cost-effective than reconstruction,” Swiss Re Chief Economist Jérôme Haegeli is quoted as saying in the press release.
New hurricane season
The second half of the year began with forest fires in several countries, but also with flash floods in Central Texas, for example, notes the Swiss Re Institute.
The focus is now shifting to the North Atlantic hurricane season in the second half of the year: forecasts point to three to five major hurricanes – the long-term average is three hurricanes.
Adapted from German by DeepL/ac
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