Summary of Aon‘s 2026 Climate and Catastrophe Insight Report:
This report highlights a meaningful shift in the landscape of natural disaster costs, with severe convective storms (SCS) now surpassing tropical cyclones as the most expensive insured peril of the 21st century. Here’s a breakdown of the key findings:
* SCS are increasingly costly: In 2025 alone,SCS caused $61 billion in insured losses globally and $82 billion in economic losses. As 2020, there have been 306 SCS events resulting in over $1 billion in economic losses, exceeding the 282 such events caused by tropical cyclones.
* Rising frequency & severity: The number of billion-dollar disaster events is accelerating. 2025 saw 49 such events (vs. a long-term average of 46) and insured losses from these events hit 30 (vs. a historical average of 17).
* US is the hotspot: The United States accounts for the majority of both economic (54%) and insured (81%) losses, totaling $103 billion in 2025.
* Wildfires are escalating: California’s Palisades and Eaton fires were the most expensive wildfires ever recorded, causing $58 billion in economic damage and $41 billion in insured losses.
* Insured payouts remain high: Despite overall economic losses being the lowest since 2015 ($260 billion), insured payouts remained high at $127 billion – the sixth consecutive year exceeding $100 billion.
* Protection gap is improving, but unevenly: The gap between economic and insured losses narrowed to 51%, but this is largely due to high-impact events in developed markets like the US. Emerging markets still face significant uninsured exposure.
* Parametric insurance is gaining traction: Products like catastrophe bonds with parametric triggers (automatic payouts based on pre-defined conditions) are proving effective, as demonstrated by Jamaica’s rapid recovery after Hurricane Melissa.
* Need for increased resilience: The report emphasizes the importance of investing in smarter technology, stronger infrastructure, better forecasting, resilient building standards, and modernized infrastructure. Both physical and financial resilience are crucial.
In essence, the report paints a picture of a changing climate driving more frequent and severe weather events, demanding a proactive and data-driven approach to risk management and resilience building.
You can find the full report here: https://aon.mediaroom.com/2026-01-20-Severe-Convective-Storms-Now-the-Costliest-Insured-Peril-of-the-21st-Century,-Aon-Reports
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