Rising Climate Disasters Threaten Global Insurance, Munich Re 2025 Report Shows

Over $100 billion in insured losses, $224 billion in total damages, and more than 17,000 victims. These are the numbers, released by Munich Re, that describe the economic and social impact of natural disasters in 2025 and the role of climate change.

A year that confirms a now structural trend: climate risks are not only increasing, but are increasingly striking through events such as forest fires, floods, and convective storms, with direct consequences for insurance balance sheets and global financial stability.

The growing burden of “non-peak hazards”

The most critical picture concerns “non-peak hazards” related to climate change, such as wildfires, floods, and severe convective storms. In 2025, these events caused total losses of $166 billion, of which $98 billion was insured, significantly exceeding the inflation-adjusted averages of the last 10 and 30 years. According to scientists, the increased frequency and intensity of these phenomena is closely linked to climate change.

As Thomas Blunck, member of the Munich Re Board of Management, points out, the absence of hurricanes in the continental United States, for example, has been a matter of luck rather than structural resilience. “Adapting to these climate risks is essential,” he says, reiterating the insurance sector’s strategic role in strengthening the global economy’s safety net.

The most expensive natural disasters of 2025

The costliest natural disaster of the year was the Los Angeles area wildfires , with total losses of $53 billion, including approximately $40 billion in insured. A combination of extreme drought and strong winds made the event the costliest wildfire on record , resulting in the deaths of 30 people.

This was followed by the magnitude 7.7 earthquake in Myanmar, a primarily humanitarian tragedy with approximately 4,500 victims and economic losses of $12 billion, much of it uninsured. In the United States, meanwhile, violent spring storms with over 100 tornadoes caused insured losses of approximately $7 billion.

An unconventional cyclone season: the consequences of climate change

2025 was also the year of Category 5 hurricanes, with three of them hitting the Atlantic, a number not seen since 2005 when the New Orleans region was devastated by Hurricane Katrina, which remains one of the costliest natural disasters of all time.

Hurricane Melissa, in particular, devastated Jamaica with winds reaching peak speeds of nearly 300 km/h, causing nearly $10 billion in damages, of which only $3 billion was insured, and the deaths of approximately 100 people. However, for the first time in ten years, no hurricane directly hit the United States, significantly reducing overall losses compared to historical averages.

In the Northwest Pacific, many cyclones moved far south. As a result, Japan was largely spared by typhoons. By contrast, Southeast Asian countries were hit more frequently than usual, including Thailand, Vietnam, Indonesia, the Philippines, and China . Furthermore, the storms coincided with a very intense rainy season, causing multiple torrential downpours, with hundreds of millimeters of precipitation falling in a short period of time, resulting in severe flooding in several countries.

Tropical cyclones are expected to cause approximately $37 billion in damages worldwide in 2025, of which approximately $6 billion was insured. Due to the fact that no hurricanes struck the United States, total damage last year was significantly lower than the 10-year and 30-year averages, adjusted for inflation (total damage $106 billion/$69 billion; insured losses $42 billion/$26 billion).

Temperatures also continue to rise, with 2025 being one of the hottest years on record. According to Tobias Grimm, chief climatologist at Munich Re, global warming increases the likelihood of extreme weather events, exacerbating risks for the economy and the financial system. In this context, climate change remains a systemic risk, central to ESG strategies and the long-term plans of financial operators.

Europe: Limited impact, but warning signs

Looking at Europe alone, losses from natural disasters have been relatively limited, amounting to around $11 billion . However, events such as the hailstorms in Central Europe and the record-breaking fires in Spain show that even the continent is not immune to climate change escalation that could translate into greater economic risks in the coming years.

In terms of costs, the cold wave recorded in Turkey ranks first (total damages of $2 billion, of which $0.6 billion insured), followed by hailstorms in France, Austria and Germany ($1.2 billion/$0.8 billion) and the fires in Spain which burned almost 400,000 hectares of land, almost five times the annual average between 2006 and 2024 and far more than the record recorded in the same period.

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(Featured image by Li-An Lim via Unsplash)

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