Gallagher Re: Q1 2026 saw fewer high-cost nat cat events
Gallagher Re has published its Q1 2026 Natural Catastrophe and Climate Report.
In the report the firm said that a relatively low and manageable number of high-cost Nat Cat events in Q1 2026 means that re/insurers’ annual catastrophe budgets remain ample, with the industry now in an even stronger position to withstand any future individual major events, or the higher loss aggregation of more frequent medium-sized events.
Gallagher Re estimates that it would require a single event (or a series of large events) resulting in an insured loss of $115 billion to $125 billion above expected average annual catastrophe losses to meaningfully impact the trajectory of pricing in the property (re)insurance industry.
The minimum $58 billion in economic losses from all natural perils was 12% below the 10-year Q1 average ($67 billion). The portion covered by the private insurance market or public insurance entities was at least $20 billion, or 26% lower than the decadal average ($26 billion).
In Europe, the windstorm peril through Q1 was already the continent’s costliest on an economic basis since 1999, though it failed to produce a major insured (>$10 billion) industry loss event. The nearly 20-year lack of major windstorm events in Europe has raised the question of whether it should still be considered a so-called "peak" peril, considering that every other Nat Cat peril has had at least one >$10 billion nominal insured loss events during that timeframe.
Elsewhere, the report considers severe convective storms (SCS) - tornadoes, hail, and straight‑line winds - in the US, and the complex web of hazard and non-hazard drivers contributing to the steadily more expensive trajectory of insured losses attributed to the peril since 2008.
Since 2008, the industry has incurred aggregate nominal (actual) losses above $20 billion nine times, above $30 billion five times, and above $50 billion in the past three consecutive years alone (2023-2025)
Gallagher Re analysis reveals it is macroeconomic and socioeconomic reasons, rather than weather or climate factors, driving the bulk of the loss increase. An estimated 80%-90% of the annual nominal growth in US SCS losses this century is attributable to non-hazard related factors, including rising replacement costs, social inflation, growth of more vulnerable exposure, construction, and labour costs, and an extreme volatility of global oil / energy prices which drives higher asphalt material prices.
The rapid expansion of housing in hail- and wind-prone regions, particularly in states like Texas, has also amplified exposure to SCS events. From 2000 to 2025, the top 20 states with the highest SCS insured losses have added 14.3 million new housing units, with Texas alone accounting for at least 4.5 million more residential properties.
Finally, the post-2008 SCS loss environment has been significantly influenced by claims inflation and labour market constraints. The rise of assignment of benefits (AOB) agreements, increased claims litigation, “neighboritis”, and fraudulent claims have further increased Loss Adjustment Expense (LAE) costs. While regulatory reforms in some states have curbed AOB activity, the broader trend of escalating per-claim costs continues to challenge the insurance industry.
Chief science officer Steve Bowen, commented: “The rise in US SCS losses has been staggering since 2008. While climate change has continued to influence weather patterns, the direct links to SCS remain less clear in its contribution to the growth in loss costs during the past nearly 20 years. When taking a deeper dive into broader socioeconomic and macroeconomic factors, it becomes clear that volatility linked to the energy market, construction / labour costs, social inflation, and how / where people live are the main drivers of these higher losses.
“Recognising and incorporating these hugely important factors will remain central to effective underwriting, pricing, and portfolio management. How we limit future loss volatility will depend as much on building smarter and more resilient structures, as it does on understanding the scientific facts of the peril. This will be particularly important as costlier exterior-mounted technologies and the growth in data centre exposure adds new loss potential.
“The insurance industry must continue to broaden its lens to account for more macroeconomic, socioeconomic, geopolitical, and scientific factors when assessing SCS loss potential. This is true not only in the US, but also internationally, as SCS losses grow in Europe, Asia, and Oceania.”
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