Aon warns of convective storm threat
Aon has launched the 2026 edition of its annual Climate and Catastrophe Insight report, revealing that severe convective storms (SCS) have surpassed tropical cyclones to become the costliest insured peril of the 21st century.
The report shows how increasingly common, high-volume events are reshaping global loss patterns and highlights the critical importance of both physical and financial resilience to help organisations manage volatility and unlock insurability.
Global economic losses from natural disasters reached $260 billion in 2025 — the lowest since 2015 — yet insured losses remained elevated at $127 billion, marking the sixth consecutive year that insurance payouts exceeded the $100 billion threshold. This divergence reflects how concentrated, high severity frequency peril events — particularly in the United States — continue to drive substantial insured loss even in below average
hazard years. In many regions, especially emerging markets, more than half of economic losses remained uninsured, leaving millions exposed to financial risk.
By quantifying the return on investment of mitigation measures and demonstrating credible loss reduction to insurers and capital providers, organisations can reshape how risk is financed and unlock more affordable, sustainable insurance coverage. This creates opportunities for the industry to deploy capital more effectively and close longstanding protection gaps.
“This year’s report highlights the growing need for collaboration among organisations, insurers, governments and communities,” said Greg Case, president and chief executive of Aon. “The insurance industry is well-positioned to act as a strategic partner to help navigate these challenges, bringing record levels of capital to help clients respond to weather risks and build increasingly diverse alternative risk transfer solutions to strengthen resilience in the face of a changing climate.”
Key findings from the report include:
• Severe convective storms (SCS) have overtaken tropical cyclones as the costliest insured peril of the 21st century, driven by high‑frequency, high‑severity outbreaks in the US. In 2025 alone, SCS generated $61 billion in insured losses globally, the third‑highest SCS total on record.
• Insurers covered nearly half of global economic losses in 2025, leaving a protection gap of 51%, the lowest on record. This was a result of concentrated high-impact events in the U.S.
• 49 billion‑dollar economic‑loss events occurred in 2025 (above the long‑term average of 46), while 30 billion‑dollar insured‑loss events far exceeded the historical average of 17 — underscoring the accumulation effect of increasingly frequent, medium‑sized catastrophes.
• Wildfires in California (Palisades and Eaton Fires) 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.
• Global fatalities totalled 42,000 driven primarily by earthquakes and heatwaves — 45 percent below the 21stcentury average. The Myanmar earthquake was the deadliest event apart from heatwaves, claiming 5,456 lives.
• Extreme heat caused more than 25,000 deaths globally and remained a major driver of natural disaster related mortality, as 2025 ranked as the third hottest year on record.
The report also provides insights into regional trends, where key findings include:
• US: More than 54 percent of global economic losses occurred in the US, with above-average losses driven by wildfires and SCS. Insured losses reached $103 billion, representing 81 percent of global industry losses.
• Americas: Hurricane Melissa was the region’s costliest event, with $11 billion in economic damages and $2.5 billion insured losses in Jamaica, Cuba and elsewhere. South America experienced significant drought impacts, led by Brazil’s prolonged drought with approximately $5 billion in agricultural losses. Severe flooding events hit Mexico, Ecuador and Bolivia.
• EMEA: Economic losses were well below long term averages, with SCS as the costliest peril and additional losses driven by drought, heatwaves and wildfires across southern Europe.
• APAC: The Myanmar earthquake was the deadliest global event except for heatwaves, with $15.7 billion in economic losses. Flooding in China and cyclones in South and Southeast Asia also drove significant losses. Australia experienced two billion-dollar insured loss events.
The 2026 Climate and Catastrophe Insight report reveals that alternative risk transfer is increasingly critical for providing the capital needed to help organisations mitigate risk and strengthen resilience. Parametric insurance products — which release funds automatically when specified trigger conditions are met — proved critical during events such as Hurricane Melissa, enabling rapid recovery for affected communities. Jamaica, for instance, secured more than $650 million in liquidity within two months of landfall as a result of catastrophe bond protection with a parametric trigger.
As well as encouraging alternative risk management solutions, the report calls for increased resilience via smarter technology and stronger infrastructure; better forecasting, resilient building standards and modernised infrastructure to reduce long-term damage and assist communities and businesses to recover faster.
“Resilience today must be both physical and financial,” said Michal Lorinc, head of Aon’s catastrophe insight and author of the report. “Organisations are urged to embed adaptation into their workforce and location strategies, invest in predictive analytics and encourage cross-functional approaches to weather risk. As climate events continue to affect people and property, the opportunity lies in using data to strengthen preparedness, rethink risk management strategies and build partnerships that support faster recovery and long-term resilience.”
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