Gallagher Re has released its Q3 2025 Natural Catastrophe and Climate Report, highlighting that global natural catastrophe activity was relatively mild during the third quarter.
The low frequency of high-cost events kept the year’s losses within annual catastrophe budgets for both governments and the insurance sector.
The report notes that subdued tropical cyclone activity in the Atlantic and Pacific Oceans contributed to Q3 insured loss totals of approximately US$15 billion, the lowest since 2016, when losses reached US$18 billion.
For the first nine months of 2025, preliminary global insured losses were estimated at US$105 billion. This marks the sixth consecutive year with losses exceeding US$100 billion and the eighth year since 2017 that this threshold has been surpassed.
Despite the ongoing trend of high annual losses, the total for 2025 so far is 8% lower than the decadal average of US$114 billion. When isolating weather and climate-related insured losses, the US$102 billion recorded for the first three quarters is 7% below the ten-year average.
Significant monsoon flooding occurred in parts of Asia, including China, Japan, Pakistan, and India, during the third quarter. These events contributed to a year-to-date global economic flood loss of US$28 billion. Flooding in Pakistan alone resulted in at least 1,037 fatalities.
The most significant non-US event was a magnitude 7.7 earthquake in Southeast Asia, with its epicenter in Myanmar and impacts extending into Thailand. This earthquake caused an estimated US$15 billion in economic damage.
The US has also experienced 18 additional billion-dollar events, with all but one related to severe convective storms. Globally, there have been at least 17 billion-dollar events outside the US.
Steve Bowen (pictured above), chief science officer at Gallagher Re, said that the top five costliest events in 2025, including two major January wildfires in Los Angeles and three US severe convective storm outbreaks, accounted for 54% of all global insured losses.
“If the last three months of 2025 stay manageable and on par with recent historical loss performance in Q4, this will likely be a further boost to the (re)insurance industry’s financial buffers.”
The report builds on findings from earlier in the year, when Gallagher Re’s H1 2025 Natural Catastrophe and Climate Report indicated that insured losses from natural catastrophes had already reached at least US$84 billion globally in the first six months.
This figure was about 55% above the 10-year average, with 92% of those losses tied to weather and climate-related events in the United States.
The January wildfires in Los Angeles County were a major factor in the year’s loss totals. The Palisades and Eaton fires together produced economic losses of at least US$65 billion and insured losses of up to US$40 billion, making them the costliest wildfires ever recorded in the first quarter of any year.
Severe convective storm (SCS) activity has remained a primary driver of insured losses in the US By mid-May 2025, Gallagher Re had identified eight separate SCS events, each surpassing US$1 billion in insured losses.
The latest report also highlighted that global temperatures continued to set modern records in 2025. According to Copernicus, the European Union’s Earth observation program, the combined land and ocean temperature anomaly for the first nine months of 2025 was 1.05°F above the 1991-2000 average and 2.63°F above the pre-industrial baseline.
Gallagher Re identified the increasing risk of heat-related stress as a challenge for re/insurers, noting that many impacts are not captured by traditional catastrophe models. Unmodeled risks include energy grid failures, vulnerabilities in AI data centers, soil subsidence, and the broader effects of extreme heat. The report suggests that re/insurers may need to invest in advanced analytics and develop tailored risk assessment frameworks to address these gaps.
Bowen noted that even with a manageable catastrophe year, volatility in annual natural catastrophe losses should be expected. He said the trend of increasing losses is likely to continue as extreme events become more severe or shift geographically.
“We should continue to expect that low frequency/probability events may become a bit more likely as the ‘tail’ shifts,” Bowen said. He added that changes in hazard behavior, combined with socioeconomic and macroeconomic factors, will drive greater loss potential.
Bowen pointed to the difference between the recent five-year average annual loss of US$155 billion and the ten-year average of US$135 billion, emphasizing the importance of building financial underwriting protections against loss volatility.
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