Insurers have been told that they should prepare for a new normal of a $171 billion  bill for natural catastrophe losses.

The catastrophe modelling business unit of Verisk has released its  2026 Global Modelled Catastrophe Losses Report, which warned that the insurance industry should be prepared to withstand $171 billion in insured catastrophe losses on average in a given year, up $19 billion from a year ago, and the highest estimate Verisk has reported to date.

The industry’s loss benchmark increased even after a year with no US hurricane landfalls for the first time in a decade, and it reflects continued growth in property values and insured values worldwide.

“A quiet hurricane season can lead markets to respond as if risk has eased: rates soften, insurers keep more risk on their own books, and more capital competes to write new business,” said Rob Newbold, president of Verisk Catastrophe and Risk Solutions. “But 2025 reminds us that the underlying risk landscape has changed and years without significant losses from US hurricane activity no longer signal a quieter catastrophe environment.”

For the sixth straight year, global insured catastrophe losses exceeded $100 billion – a result driven not by severity perils like earthquakes and hurricanes, but by record-setting wildfires and significant severe thunderstorm activity, which produces widespread hail, wind and tornado damage across many communities rather than a single catastrophic event.

“A more dynamic risk environment underscores how catastrophe models help insurers maintain underwriting discipline and make informed pricing, capital allocation and risk transfer decisions based on the full range of risk, not just the outcome of a single season,” Newbold added.

The report’s headline figure is Verisk’s global insured average annual loss, or AAL: a modelled, long-term estimate of catastrophe risk derived from simulations across the company’s global suite of models. It is not a prediction of losses in 2026 or in any other individual year; rather, it serves as a benchmark insurers can use to evaluate potential losses across a wide range of events, perils and regions.

Since Verisk first published this report in 2012, the estimated global insured AAL has nearly tripled, rising from $59 billion to $171 billion. The original 2012 figure was expressed in 2012 dollars. The change also reflects Verisk’s investment in expanding model coverage to more than 20 additional countries and regions, advances in science, data and modelling methods, updates to Verisk’s view of risk, and growth in insured exposure.

The report added catastrophe losses are shaped by more than the number or severity of storms, wildfires or earthquakes in a given year. Several long-term trends continue to increase the value of property at risk and the potential cost of future catastrophes:

• There is more property to insure. Property exposure in the countries Verisk models has grown roughly 7 percent annually since 2021, driven by both new construction and rising asset values.
• The cost of rebuilding keeps increasing. In the United States, residential reconstruction costs have risen about 5 percent annually since 2021, outpacing consumer inflation and increasing the potential cost of catastrophe losses even when hazard activity remains unchanged.
• More people and property are concentrated in hazard-prone areas. Population growth continues to be concentrated in catastrophe-exposed regions, while development expands in flood plains, wildfire zones and other high-risk locations. In England, for example, 7.1 percent of single-family houses already sit in the 100-year flood plain, and one in nine new houses built between 2022 and 2024 was built in a flood-risk area — a share Verisk’s models project could rise to one in seven new houses by 2050.

Together, these trends increase insured catastrophe losses independently of weather patterns and help explain why the industry’s risk benchmark continues to rise.

The report also highlighted a persistent and uneven protection gap. Globally, only about 38% of economic losses from natural catastrophes are insured, corresponding to a modelled economic AAL of more than $450 billion. In Europe, the gap is wider than the global average: of the region’s $110 billion in expected annual economic catastrophe losses, only about $24 billion (22 percent) is currently insured. In July 2025, flash floods in Central Texas, the deadliest flood event in nearly five decades, occurred in a region where the national flood insurance take-up rate is about 3 percent, and take-up in the hardest-hit county was about 2.5 percent. When an earthquake struck Myanmar in March 2025, insurers covered less than $100 million of roughly $12 billion in economic losses.

“Narrowing the protection gap requires broader access to insurance and a clear understanding of the risk,” Newbold said. “By expanding model coverage and making both Verisk and third-party models available through our platforms, we are helping insurers evaluate risk in more markets and identify opportunities to extend coverage to communities that remain underinsured.”