Design Highlights
- Insurers face escalating climate-related damages, with the US experiencing $182.7 billion in losses in 2024, highlighting their inadequate risk management.
- Despite 99% of insurers reporting on risk management, only 29% disclose meaningful metrics, limiting their effectiveness in addressing climate risks.
- The protection gap persists, with 8% of US homeowners uninsured, indicating a significant vulnerability to climate-related disasters and inadequate coverage.
- Regulatory challenges complicate climate disclosure, as recent shifts retract requirements, hindering insurers’ ability to adapt to increasing climate risks.
- AI and real data offer potential solutions, but current strategies indicate a failure to effectively manage the growing challenges posed by climate change.
Insurers are in a tight spot, and it’s getting tighter. The numbers don’t lie. Insured losses hit a staggering $100 billion in the first half of 2025, a jump of 40% from 2024‘s already alarming $71 billion. And guess what? This isn’t a one-off. It marks the fifth consecutive year that global insured losses from natural disasters surpassed the $100 billion mark. The trend is clear: nature is throwing tantrums, and insurers are left scrambling.
Take a moment to digest this. Total economic losses from natural catastrophes reached $162 billion in H1 2025. That’s right, up from $156 billion in 2024. And if you think it’ll get better, think again. Projected insured losses for the full year are set to reach $145 billion. Severe convective storms alone caused $50 billion in insured damage in the US in 2024. Talk about a stormy forecast.
Let’s talk climate. In 2024, climate-related damages in the US were estimated at a whopping $182.7 billion. US insurers reported climate-related damages Wildfires in Los Angeles? They’re not just a problem for the locals; they’re projected to cause losses between $76 to $131 billion. Hurricanes are getting in on the action too. Hurricane Helene racked up $79 billion in total costs while Hurricane Milton wasn’t far behind with $34 billion. All in all, 27 billion-dollar weather disasters contributed to that hefty $182.7 billion damage tally. Additionally, climate change risks have achieved their highest-ever ranking at #5 in 2025, emphasizing the urgency of the situation.
And yet, amidst this chaos, insurers are still lagging in transparency. Sure, 99% reported on risk management, but only 29% actually disclosed metrics and targets. It’s like saying you went to the gym but only lifting a dumbbell once. Progress? Maybe. But it’s like walking a tightrope without a safety net.
Now, let’s talk about the protection gap. Nearly 8% of US homeowners are uninsured. That’s $1.6 trillion in assets hanging by a thread. And with premiums climbing an average of 21% since 2015, it’s no wonder 67% of homes are underinsured. Meanwhile, general liability insurance premiums have become more manageable with rate increases slowing to just 2.3% in early 2025, offering a rare bit of relief for small businesses.
Regulatory shifts aren’t helping either. The US is pulling back on climate disclosures, and insurers are left to navigate this minefield of risks. It’s a mess.
In a world of extreme weather and rising costs, insurers are caught in a relentless cycle. The question remains: can ruthless AI and real data pull them from the brink? Because right now, it’s clear they’re failing on climate risk.
