Severe convective storms have overtaken hurricanes as the costliest insured weather peril, with SCS-related catastrophe losses exceeding $60 billion last year, Allianz Commercial has warned.
Natural catastrophes ranked fifth in the latest Allianz Risk Barometer, reflecting growing alarm across the industry over the financial toll of extreme weather. SCS events, which include hailstorms, tornadoes and derechos, can strike with little warning and cause severe localized damage.
Thomas Lillelund, chief executive of Allianz Commercial, said cumulative SCS losses now rival or exceed those from hurricanes. "This reality highlights the urgent need for businesses to reassess their risk exposure and strengthen operational resilience," he said.
Gallagher Re estimates put SCS at nearly half of all insured catastrophe losses in 2025. Aon's 2026 Climate and Catastrophe Insight report reached a similar conclusion, finding SCS had overtaken tropical cyclones as the costliest insured peril of the 21st century.
The United States accounts for more than 80% of global insured SCS losses. Hailstorms are responsible for an estimated 50% to 80% of total claims, Allianz Commercial analysis shows. Losses increasingly involve high-value assets such as aircraft fleets and solar installations.
The insured figures understate the full cost. Swiss Re put total economic losses from natural catastrophes at $220 billion in 2025, against $107 billion covered by insurance.
Aon research found the global protection gap narrowed to 51% last year, though largely because events hit the well-insured US market. In emerging economies, 80% to 90% of catastrophe losses remain uninsured.
The 2025 total is not an outlier. Swiss Re figures show it was the third-costliest year on record for SCS, at $51 billion in insured losses.
Between 2020 and 2024, cumulative SCS losses reached nearly $200 billion, roughly two-and-a-half times the total from the preceding five years. Billion-dollar SCS events were 44% more frequent in the five years to 2025 than in the period before, Swiss Re noted.
Rising construction costs have compounded the problem. Asphalt roof replacement costs have climbed 250% since 2000 in some regions, with a 45% increase in the past five years alone, Willis Re data shows.
Allianz Commercial said AI-driven tools could now identify physical vulnerabilities before storms hit, helping businesses act on risk rather than react to damage.
Michael Bruch, the firm's global head of risk advisory, said traditional catastrophe models had struggled with property-level risk.
"As AI becomes embedded in core risk processes, its most meaningful benefit is its ability to support smarter, evidence-based resilience strategies that adapt to changing weather patterns, rather than relying on historical norms," he said.
