Munich Re: climate change driving costliest wildfires ever as global disaster losses climb
Worldwide, natural disasters caused overall losses of around $131 billion in the first half of 2025 (previous year, adjusted for inflation: $155 billion), of which $80 billion was insured (in 2024: $64 billion), according to the latest figures from Munich Re.
Both overall losses and insured losses were significantly higher than the average for the previous ten years and the previous 30 years (adjusted for inflation: overall losses of $101/79 billion, insured losses of $41/26 billion). Insured losses in H1 2025 were the second-highest in the first half of any year since our records began in 1980. Only in the first half of 2011 were insured losses even higher, attributable to a severe earthquake and destructive tsunami in Japan.
Weather disasters caused 88% of overall losses and 98% of insured losses, while earthquakes accounted for 12% and 2% respectively.
The wildfires in the greater Los Angeles area resulted in the costliest natural disaster during the first six months of 2025. Moreover, they occurred in winter, which is typically rainy. The overall loss is estimated at $53 billion, around $40 billion of which was insured. Never before had wildfires caused such extensive damage. The overall losses and insured losses due to this single event were nearly twice as high as global wildfire losses in 2018, which had previously been the most expensive wildfire year. 29 people perished in the fires.
Numerous studies indicate that climate change is increasing the risk of wildfires by elevating the frequency of conditions that cause them. But the set of circumstances regarding the LA fires is complex:
- For example, the rainy season in Southern California usually begins around October. But in 2024, there was very little rain.
- In previous years, an abundance of precipitation had conversely allowed vegetation to flourish. After a long dry phase in late 2024 and early 2025, an excess of highly flammable brush fuelled the wildfires.
Exacerbated by California’s strong winter winds, known as the Santa Ana winds, the conditions constituted a textbook scenario for wildfires. Once the fires had started on 7 January, wind gusts and gales acted like flamethrowers – flinging sparks across landscapes, in turn setting one building after another ablaze.
Chief climate scientist Tobias Grimm explains: “Strong Santa Ana winds are common in California during winter. At the same time, the wildfire season there tends to last longer than in the past because there is often less precipitation in the cooler months. This means that two accelerants, drought and strong winds, coincide more frequently. Then all it takes is just one spark in the wrong place for disaster to strike.”
Munich Re has been supporting the Institute for Business and Home Safety (IBHS) in the USA for many years to research methods designed to prevent losses. Among other things, IBHS conducts analyses of construction designs and methods that can both strengthen the fire resistance of buildings and prevent fire from spreading from one structure to the next.
Thomas Blunck, Member of the Board of Management said: “Climate change is a fact and is changing life on earth. Disasters like the one in Los Angeles have become more likely due to global warming and they teach us a very important lesson: people, authorities and companies must all adapt to new circumstances.
“The best way to avoid losses is to implement effective preventive measures, such as more robust construction for buildings and infrastructure to better withstand natural disasters. Such precautions can help to maintain reasonable insurance premiums, even in high-risk areas. And most importantly: to reduce future exposure, new building development should not be allowed in high-risk areas.”
The impact of climate change on weather disasters has been shown by research many times over, Munich Re said. There is a well-established consensus within the scientific community that climate change makes many weather-related disasters more frequent and severe. After the record year of 2024, the current year is again on its way to ranking among the warmest since the beginning of systematic record-keeping. Based on NOAA data, the annual average global temperatures in the first half of 2025 reached 1.4°C above pre-industrial levels (1850–1900), making it the second-warmest first half-year on record.
A 7.7-magnitude earthquake in Myanmar on 28 March was first and foremost a devastating humanitarian disaster, killing an estimated 4,500 people. The epicentre was near the cities of Sagaing and Mandalay, home to over one million residents. All in all, the quake is estimated to have caused economic losses of some $12 billion – making it the second-costliest natural disaster in H1 2025. Only a small percentage of those losses were insured.
The region is regarded as very earthquake-prone. The quake occurred along the Sagaing Fault, which runs through Myanmar from north to south. The earthquake even caused damage in the Thai capital of Bangkok, approximately 1,000 km from the epicentre. Damage there was mainly attributable to the deep and soft alluvial soil beneath Bangkok, which not only amplifies ground motion but also increases its duration.
The USA accounted for by far the largest share of natural disaster losses in the first half of the year – particularly due to the wildfires around Los Angeles.
In addition, there were once again numerous severe thunderstorms in the United States that triggered heavy rainfall and tornadoes. The four most expensive series of storms, including severe tornado outbreaks, occurred in March, April and May – resulting in overall losses of around $19 billion, of which $14.6 billion was insured. Overall, losses from these kinds of storms (known as severe convective storms) in the United States totalled $34 billion in the first six months of 2025. Around $26 billion of the losses were insured.
Despite multiple weather disasters, overall losses in Europe remained below the previous year's figures, at around $5 billion – more than half of which was insured. Europe’s costliest natural disaster in the first half of the year was a series of thunderstorms with hail that hit France, Austria and Germany in June. Insurance companies paid claims totalling some $0.8 billion, with overall losses amounting to $1.2 billion.
In the Swiss canton of Valais, a severe landslide in the Loetschental valley on 28 May started at the Kleines Nesthorn, a mountain peak more than 3,300 metres above sea level. Millions of tonnes of debris and ice from the Birch Glacier thundered down into the valley. The village of Blatten below, which had been evacuated ahead of the impeding landslide, was almost completely buried. Overall losses are estimated at just under $0.5 billion, of which around $0.4 billion was insured. Scientists expect such landslides to occur more frequently, as global warming causes glaciers to melt and permafrost to thaw – in turn making mountain slopes and rock faces increasingly unstable.
In Asia-Pacific, a tropical cyclone in Australia was the region’s second-worst natural disaster after the earthquake in Myanmar. Moreover, Cyclone Alfred was briefly a Category 4 storm; only a Category 5 cyclone is more severe. Alfred unleashed extreme rainfall that led to severe flooding in Queensland and New South Wales. More than half a million people were without power for days. Overall losses were estimated at $3.5 billion, of which $1.4 billion was insured.
This cyclone was unusual in that it tracked very far south, in a non-tropical region east of Brisbane. Research suggests that tropical cyclones could threaten this densely populated region more frequently in future as a result of climate change.
A magnitude-6 earthquake on 21 January in the Taiwanese city of Tainan, in the southern part of the country’s high-tech corridor, led to overall losses of $1.3 billion, of which $0.6 billion was insured, with a significant share stemming from business interruption policies for the semiconductor industry. The production of semiconductors in ultra-clean rooms is a very complex and delicate procedure. If manufacturing is interrupted, unfinished semiconductors are rendered useless.
Together, two cyclones in the southwest Indian Ocean caused overall losses of $1.5 billion. In February, Cyclone Garance hit the French island of Réunion with extreme rainfall and wind speeds of up to 180 km/h, leaving large parts of the island without electricity and water. Just over two weeks later, Mozambique and Madagascar were also hit by a cyclone – as they had been in 2019 and 2023. In Mozambique in particular, many mostly simple residential dwellings and bridges were destroyed. A share of around $0.4 billion was insured in Réunion, and almost nothing in Mozambique.
On the whole, H1 2025 losses in the Asia-Pacific and Africa regions totalled around $29 billion – slightly lower than the ten-year average. Only about $5 billion of the losses were insured.
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