Industry to experience average annual insured nat cat losses of $171bn: Verisk

According to Verisk, the global data analytics and technology provider, the insurance industry should be prepared to withstand an average $171 billion in annual natural catastrophe losses in any given year, according to the firm’s latest average annual losses (AAL) benchmark.

The figure is up $19 billion on Verisk’s 2025 benchmark, due to continued growth in property and insured values worldwide.

This information stems from Verisk’s 2026 Global Modeled Catastrophe Losses Report, which revealed that severe thunderstorm accounts for 40% of modeled insured catastrophe risk, which is more than any other peril.

In fact, it remains the largest contributor to Verisk’s global insured AAL, ahead of tropical cyclone (27%) earthquake (10%), winter storm (9%), flood (7%) and wildfire (6%).

“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. But 2025 reminds us that the underlying risk landscape has changed and years without significant losses from U.S. hurricane activity no longer signal a quieter catastrophe environment,” said Rob Newbold, president of Verisk Catastrophe and Risk Solutions.

Newbold continued: “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.”

In last year’s report, Verisk estimated AAL from natural catastrophe events at $152 billion, a slight increase on its estimate of $151 billion in 2024.

Now, in its 2026 report, Verisk’s estimate has increased by $19 billion to $171 billion.

According to the report, the United States accounts for the majority of modelled insured catastrophe risk, with Verisk noting that 68% of the expected $171 billion is located in the country.

Since Verisk first began publishing this report in 2012, the estimated global insured AAL has nearly tripled, climbing from $59 billion to a staggering $171 billion.

The company explained that these shifts reflect Verisk’s investment in expanding model coverage to more than 20 additional countries and regions, as well as advances in science, data and modeling methods, and updates being made to Verisk’s view of risk, and growth in insured exposure.

Verisk’s report also highlighted several long-term trends that continue to increase the value of property at risk and the potential cost of future catastrophes.

According to Verisk, property exposure in the countries the firm models has grown by roughly 7% annually since 2021, driven by both new construction and rising asset values.

At the same time, the cost of rebuilding keeps increasing, which is clearly showcased in the United States, where residential reconstruction costs have risen about 5% annually since 2021, outpacing consumer inflation and increasing the potential cost of catastrophe losses even when hazard activity remains unchanged.

Verisk’s report also explained that 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 homes already sit in the 100-year flood plain, and one in nine new homes 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 homes by 2050,” Verisk noted.

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

Importantly, Verisk’s report also emphasises that a year without a US landfalling hurricane can lull the market towards thinner pricing and looser underwriting terms, precisely when discipline matters most.

Dr. Jay Guin, executive vice president and chief research officer of Verisk Catastrophe and Risk Solutions, commented: “The $171 billion figure is not determined by the outcome of one hurricane season or one year of catastrophe losses. It reflects a wide distribution of potential events across perils and regions, using current exposure data and a view of hazard grounded in the near-present climate. That broader perspective helps the industry prepare for loss scenarios that historical experience alone may not reveal.”

Lastly, the report also highlights a persistent and uneven global protection gap.

According to the report, on a global basis, roughly 38% of economic losses from natural catastrophes are insured, corresponding to a modeled economic AAL of more than $450 billion.

In Europe, the gap is greater than the global average: out of the region’s $110 billion in expected annual economic catastrophe losses, only approximately $24 billion (22%) is currently insured.

Highlighting July 2025’s flash floods in Central Texas, which marked the deadliest flood event in nearly five decades, Verisk noted that this occurred in a region where the national flood insurance take-up rate is around 3%, with the most affected county having a participation rate of about 2.5%

“Narrowing the protection gap requires broader access to insurance and a clear understanding of the risk. 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,” Newbold concluded.