Natural catastrophes drop to #5 globally, driven by factors such as a quieter hurricane season during 2025. However, insured losses caused by cat events still hit US$100bn for the sixth year in a row.
This article is part of the overview of the most important business risks in 2026, according to the Allianz Risk Barometer 2026.
A fall in the ranking masks a complex reality
Natural catastrophes drop two places in the Allianz Risk Barometer, from #3 to #5, while the related risk of climate change slips from #5 to #6. This could be interpreted as respondents downplaying the risks involved, but if that’s the case, the data from 2025 tells a cautionary tale. Economic and insured losses remained high, albeit lower than the 10-year average, and the evolving nature of natural catastrophes continues to pose significant challenges to businesses and the (re)insurance industry.
Insured losses from natural catastrophes are set to reach US$107bn for 2025, according to Swiss Re [1] – the sixth year in a row they have exceeded $100bn, while economic losses are well in excess of $200bn.
Although natural catastrophe was only ranked #1 in one country – Malaysia – it made the top three risks in Argentina, Canada, Croatia, Czech Republic, France, Greece, Japan, Mexico, the Philippines, Portugal, Spain and Thailand.
The year got off to an active start, with the Palisades and Eaton wildfires in California. Economic losses for these are estimated [2] to be $65bn, of which around $40bn were insured [3]. Wildfires have never caused such extensive damage [4].
A close-to-average North Atlantic hurricane season undoubtedly helped moderate losses this year. Of the 13 storms that formed, only three made landfall and, for the first time in 10 years, no hurricane made landfall in the US. Hurricane Melissa, however, was a reminder of the devastation a single storm can cause.
Overview
Natural catastrophes (e.g., storm, flood, earthquake, wildfire)
Ranking history:
- 2026: rank 5
- 2025: rank 3
- 2024: rank 3
- 2023: rank 6
- 2022: rank 3
- 2021: rank 6
Top risk in:
- Malaysia
“This year’s Allianz Risk Barometer suggests some businesses are overlooking long-term risks like climate change, but the lower than average losses for natural catastrophe in 2025 are no reason to diminish the importance of the risks it presents,” says Mabé Villar-Vega, Senior Catastrophe Risk Research Analyst at Allianz Commercial. “When natural catastrophes are not making headlines, awareness of these issues might fade, potentially causing preparedness for such events to slip down a company’s priority list.”
Lessons from events in 2025
Natural catastrophes should remain a fixture on the business risk radar, says Villar-Vega, as these events from 2025 illustrate:
- Climate change increases the risk of wildfires like those seen in California in January, 2025. An abnormal dry phase in 2024 caused an excess of dry, highly flammable brush. Once the fires started, the Santa Ana winds (strong winter winds in California) quickly spread the flames
- Climate change makes large tropical cyclones, like Hurricane Melissa and Super Typhoon Ragasa, more likely. It only needs one typhoon hitting in the right place to disrupt global supply chains
- The Myanmar earthquake in March 2025 was a reminder that earthquakes are a latent risk in several regions around the world
- Landslides, like the one resulting from the collapse of the Birch Glacier in Valais, Switzerland, are likely to become more common due to climate change. In this case, the landslide almost completely buried the town of Blatten, resulting in overall losses [5] of $0.5bn ($0.4bn insured).
Main natural catastrophe events in 2025
Sources: Gallagher Re; PERILS; Munich Re; Wikipedia; Reinsurance News; Aon; Encyclopedia Britannica.
Graphic: Allianz Commercial
The dangerous potential of “secondary” perils
In 2025, “secondary” or non-peak perils – flooding, severe thunderstorms, and wildfires – drove substantial losses: economic losses in the first half of the year were $106bn; insured losses were estimated to be $77bn [6]. Europe recorded its worst wildfire season [7] in terms of burnt area, with over one million hectares burned [8].
“These events demonstrate that losses from perils once considered secondary are now comparable to traditional ‘peak’ risks, with climate change amplifying both their frequency and severity,” says Keerthy Mohandas, Catastrophe Risk Research Analyst at Allianz Commercial. “This blurring of lines between primary and secondary perils underscores the need for insurers and reinsurers to integrate emerging hazards into their nat cat risk assessment, capital planning, and resilience strategies.”
References
[1] Swiss Re, 2025 marks sixth year insured natural catastrophe losses exceed USD 100 billion, finds Swiss Re Institute, December 16, 2025
[2] Gallagher Re, Natural Catastrophe and Climate Report Q3, 2025
[3] Munich Re, Wildfires around Los Angeles, severe thunderstorms: US natural catastrophes dominate global losses in the first half of 2025, July 29, 2025
[4] Munich Re, Wildfires around Los Angeles, severe thunderstorms: US natural catastrophes dominate global losses in the first half of 2025, July 29, 2025
[5] Munich Re, Wildfires around Los Angeles, severe thunderstorms: US natural catastrophes dominate global losses in the first half of 2025, July 29, 2025
[6] Munich Re, Severe thunderstorms, wildfires, and flooding – losses from “non-peak perils” are on the rise, October 24, 2025
[7] European Commission, Europe faces worst wildfire year on record as fire seasons grow longer and more destructive, December 5, 2025
[8] Politico, EU wildfires hit new record as flames scorch area larger than Cyprus, August 21, 2025
Source: Allianz