A new study estimates that losses from natural disasters will amount to $450 billion annually. Less than half of these losses will be covered by insurance, affecting households and businesses.
Natural disasters are expected to generate a global cost of $450 billion annually, according to a study by Verisk, a company specialised in risk modelling. Up to 62% of these losses are uninsured, meaning that households, businesses, and governments will face uncovered losses of approximately $279 billion each year.
The report highlights that the increase in these costs is related to climate change and urban growth, which heighten the risk to properties. Additionally, the insurance sector is facing rising losses, although the proportion of damages covered by insurance has decreased.
In 2025, an earthquake in Myanmar caused damages of $12 billion, of which less than $100 million was insured. Floods in Texas also resulted in significant losses, mostly uninsured. In California, wildfires in early 2025 caused damages of up to $65 billion, largely affecting insured properties.
Insurers have begun to tighten the conditions of their policies and, in some cases, have withdrawn from areas considered high-risk. State Farm, the largest property insurer in the United States, announced in 2024 that it would not renew policies for 72,000 homeowners in California, reflecting the growing strain in the insurance market.
This pattern of exclusion is causing the risk to be transferred to governments and individuals, which could destabilise local markets.
“Insurers are pulling out of areas they no longer want to insure,”stated Pete Sikora, an advisor to an activist group.
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