As the world marked Earth Day this week, there have been more warnings about the increasingly volatile climate and its effects on health and the economy.

Broking group Aon has issued its 2026 Climate and Catastrophe Insight (CCI) report, which warned that global economic losses from flooding exceeded $42 billion in 2025 and $2 trillion since 2000.

Drought is also emerging as a major driver of secondary perils, contributing $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.

The report added these dynamics are evident globally and are particularly pronounced in the U.S. Aon predicts that U.S. pluvial (rainfall‑driven) flood risk could increase by about 12 percent under a medium‑emissions scenario and roughly 19 percent under a high‑emissions scenario by mid‑century. In 2025, the U.S. recorded 14 separate 24‑hour periods with rainfall amounts equivalent to a 1‑in‑1,000‑year flood – the highest count since 2002 – alongside catastrophic flash flooding in Central Texas and extensive inundation along the Mississippi Valley.

Michal Lorinc, head of catastrophe insight for Aon, said: “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.”

Recent experience has also illustrated the breadth of flood risk globally. Flooding drove China’s highest loss event in 2025, causing an estimated $14 billion in damage, while forward‑looking Climate Risk Monitor projections suggest that other regions, including much of Africa, could face increasing exposure to extreme precipitation and flash flooding.

Liz Henderson, head of climate risk advisory for Aon, said: “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.”

The threat is doing little to ease business uncertainty amid fears that the rising scale of exposures will prove more than the world’s (reinsurers) are willing or able to handle.

The world is moving into a new era when it comes to climate risks. Gone are the days of restitution where insurers will foot the costs of restoring damaged property and assets.

It is now an era of resilience in which the world will be to ensure property and assets are better able to withstand the threats the changing climate pose rather than simply looking to rebuild when disaster strikes.

Jon Guy, Editor,

Emerging Risks