Extreme weather in 2024 sent insured losses soaring to the highest in 7 years
CHANDAN KHANNA/AFP via Getty Images
- Global insured losses climbed to $140 billion last year, according to a report from Munich Re.
- That marks the highest level since 2017, led by damages from Hurricanes Milton and Helene in the US.
- Raging wildfires in Los Angeles could set up for even steeper weather-related losses in 2025.
Extreme weather events battered global insurance markets last year, bringing losses to a seven-year high amid a series of intense hurricanes and wildfires.
Insured losses totaled $140 billion, up from $106 billion the year before and marking the highest level since 2017, a report from Munich Re found.
The amount is more than double a 30-year average of around $61 billion and marks the third most expensive year for insured losses over the same timeframe.
The report, published Thursday, said weather catastrophes were responsible for about 97% of the losses.
Hurricanes Milton and Helene led the damages, marking the costliest weather catastrophes of the year with losses of $25 billion and $16 billion, respectively.
The hurricanes left a trail of destruction throughout the southeastern US, with severe flooding from Georgia to North Carolina and heavy wind damage across Florida.
An earthquake in Japan on New Year's Day marked the third costliest natural disaster of the year, collapsing numerous buildings and leaving thousands of people without electricity and water for weeks, with insured losses of around $2.5 billion.
Still, insured losses comprised less than half of the $320 billion total weather-related losses for the year, which came in at over triple the 30-year average.
As weather catastrophes have gotten more extreme—and more expensive—amid climate change, reinsurers have pulled back on their climate coverage in hurricane- or fire-exposed areas that need it most.
Only $16 billion of Hurricane Helene's total $56 billion in losses were covered by insurers, while insurers covered $25 billion of Hurricane Milton's total $38 billion loss.
After such steep losses in 2024, 2025 has also begun with a highly destructive weather event, with wildfires raging in Los Angeles.
The fires have already burned over 1,100 homes and threatened over 28,000 additional buildings, and will likely rank among the most destructive in California's history, analysts at Morningstar DBRS say.
They add that a lack of coverage from top insurers like State Farm and Allstate, which have reduced their exposure to California's market in recent years amid high risks and regulatory restrictions, could lead to a high volume of uninsured losses.
"It is therefore possible that a larger than usual portion of the losses caused by the wildfires will be uninsured or may be covered under the California FAIR Plan, which is designed to provide fire coverage up to $3 million per home and spread the risk across the industry when it is not available from traditional carriers," the analysts said.