As insurers and reinsurers look towards 2026, Dr Melanie Fischer, natural hazards and GIS/data analyst at HDI Global, expects natural catastrophe loss trends to follow the pattern seen in recent years.
In conversation with Insurance Business, Fischer said natural hazard events are “complex natural phenomena which are governed by a multitude of influencing factors," meaning that "nat cat losses in general are quite volatile.”
“Hence, it is likely that in 2026 we will see a continuation of the Nat cat loss trends that we have seen in the past years,” she said.
Fischer noted that HDI Global expects that overall global economic losses from natural catastrophe events will again be above average, that socio-economic factors will remain the main drivers of insured natural catastrophe losses, and that secondary perils will increasingly shape risk profiles.
“Looking at urbanization and growth in population, it is very likely that these socio-economic factors will drive loss trends in 2026,” she said. Asia and Africa “are projected to have the biggest increase in urbanization,” and that “a lot of people are moving into cities, which means we are seeing a lot of built up areas in these countries.”
“For example, in Pakistan, India, or Nigeria we see some of the biggest increases in city dwelling populations,” she said. She added that “within these cities we have an accumulation of valuable assets, which are potentially placed in hazard-prone areas.”
Fischer also pointed to the impact on infrastructure. “Furthermore, due to population rise, we also have an increase in energy needs,” she said. “That means that an increasing number of costly infrastructures for example hydropower schemes is placed in potentially hazard-prone areas as well.”
Secondary perils sit at the centre of this shift. “Secondary perils are definitely on the rise,” Fischer said. “We've seen that around 60 percent of global Nat cat losses in the past year were caused by secondary perils, which is a very interesting trend.”
She also said “primary perils like tropical cyclones or earthquakes still hold the largest potential to cause severe single loss events and are major drivers of loss volatility.”
On wildfire, Fischer pointed to “intense wildfires in Southern California at the beginning of this year, which increased awareness of wildfire risk in the US.” She also cited Australia’s “Black Summer” bushfire season of 2019/20 as another prominent example.
Flood remains central to the global loss burden. “In the 21st century, floods are the second most costly hazard worldwide,” she said. “In regard to Asia, this region has seen the second highest flood losses worldwide in the past year. Floods, especially floods in urban areas, are a very important hazard to look at and to keep in mind.”
Fischer said many urban areas struggle when intense rainfall occurs. “We have seen in the past that when flood events due to heavy rainfall events occur in urban areas, these cities are often not prepared for the sheer volume and high flow velocity of the water,” she said. “Existing flood protection systems can be overwhelmed, and then we see especially large flood losses.”
Severe convective storms (SCS) are another growing concern. “Finally, in the past year, severe convective storms have caused large losses in the U.S., and in other regions such as Japan,” Fischer said.
“We have seen increasing losses from severe convective storms in the past years, making severe convective storms a key focus for us as an emerging Nat cat loss driver - especially in the U.S., which remains the largest insurance market globally.”
Fischer also addressed the influence of climate change and climate variability on these patterns. “Climate change – and especially climate change attribution – is very complex, and there is a lot of research going into it,” she said.
“We have manmade climate change on the one hand, which is potentially influencing Nat cat losses,” she said, and that “we also have natural climate variability which is also influencing Nat cat losses globally, and it is complex to differentiate between the two.”
She said there are some general trends that must be kept in mind. These include an increased frequency of natural hazard events, an increased magnitude of these events, and natural hazard events occurring in regions where they have not been seen in the past or occurring with unprecedented intensities.
“This third point means there is potentially a shift in where these events occur, and it also means that adequate protection measures may not be in place in these areas.” She pointed to “the large flood event we saw in Dubai last year” and said this is “a place where I guess most of us would not have expected a major flood to happen.”
She added that “we have to keep in mind that in a changing world, hazards might occur in ‘unexpected’ areas, and this needs to be reflected in how we assess and model risk.”
Looking towards 2026, Fischer said “we have to be aware of the potential continuation of trends we've seen in the past, especially the continued influence of societal factors on insurance losses.”
“Potentially, in 2026, we could see another year of rapidly increasing insured losses, making it essential to maintain robust strategies for managing volatility,” she said.
“The last significant peak loss year was 2017,” she said, “and we may be approaching another similar period soon.” She added that the priority is “to focus on the emerging loss impacts from secondary perils, especially in highly urbanized areas, while recognizing overall Nat cat losses volatility due to primary perils, which still hold the largest loss potentials.”
