Severe Convective Storms Become Costliest Insured Peril of 21st Century: Aon

Core Insights - Severe convective storms (SCS) have become the costliest insured peril of the 21st century, surpassing tropical cyclones, with total economic losses reaching $260 billion, which is 23% below the 21st-century average and the lowest since 2015 [1] - Insured losses in 2025 reached $127 billion, 27% above the long-term average, indicating that even in a year with below-average hazards, concentrated and severe events can significantly impact global losses [2][3] - The global insurance protection gap narrowed to 51%, the lowest on record, primarily due to the concentration of losses in the U.S., which accounted for 81% of global insured losses [4] Economic Losses and Events - SCS accounted for $61 billion in insured losses globally in 2025, marking the third-highest total on record, with 30 insured loss events exceeding $1 billion, significantly above the historical average of 17 [5] - Wildfires in California were the costliest events of the year, causing $58 billion in economic losses and $41 billion in insured losses, making them the most expensive wildfires ever recorded globally [5] - Global fatalities totaled 42,000, primarily driven by earthquakes and heatwaves, which is 45% below the 21st-century average [5] Regional Trends - In the U.S., more than 54% of global economic losses occurred, with insured losses reaching $103 billion, representing 81% of global industry losses [11] - The Americas faced significant impacts from Hurricane Melissa, with $11 billion in economic damages and $2.5 billion in insured losses [11] - The EMEA region experienced at least $21 billion in economic losses, well below the 21st-century average of $54 billion, marking the lowest loss since 2006 [11] Risk Management and Resilience - Alternative risk transfer solutions are becoming increasingly critical for organizations to mitigate risk and strengthen resilience [6] - The report emphasizes the need for smarter technology, stronger infrastructure, and better forecasting to reduce long-term damage and assist communities in recovery [8] - Organizations are encouraged to invest in predictive analytics and adopt cross-functional approaches to weather risk to enhance preparedness and resilience [10]