Q1 2025 natural catastrophe insured losses are expected to reach between $53 billion and $56 billion, according to reports by Aon and Gallagher Re. The high numbers are driven primarily by wildfires, severe convective storms (SCS), and earthquakes. This is 176% higher than the decadal average of $20 billion and the second-highest total on record since Q1 2011 ($81 billion), states Gallagher Re. The number also exceeded the 21st-century average of $17 billion and median of $12 billion, according to Aon.
Insured Losses
Wildfires Drive Losses
The Palisades and Eaton fires in Los Angeles County, California, began on Jan. 7, 2025, and were active for nearly a month. Factors behind the severity of the fires included “long-term drought, high temperatures, fire-exacerbating vegetation, and terrain,” explains Aon. “In addition to these drivers, the most impactful factor for fire spread were Santa Ana winds. These extremely dry and strong katabatic winds originate from the Intermountain West, such as the Great Basin, which covers most of Nevada. Here, winds flow out from a high-pressure airmass and flow over the Sierra Nevada Mountain range, sweeping away a great deal of atmospheric moisture in the process.” These winds also hindered fire suppression efforts. Although both fires were contained in under a month, 50% of the burned acreage occurred within the first 24 hours of ignition due to the strong winds, states Aon.
The losses from the California wildfires “contributed approximately $37.5 billion, or 71% of the total insured losses” globally, notes Aon.. The Gallagher Re report, on the other hand, anticipates wildfire losses to reach over $40 billion, a number which would represent “not only the most expensive Q1 on record for this peril, but [also] the costliest aggregated quarter or full calendar year wildfire loss for the industry on record.”
Furthermore, “The Palisades Fire insured loss estimate ($23 billion) by itself is costlier than any other full year of insured wildfires losses on record.” Gallagher Re estimates the Eaton fire to have costed insurers $17 billion.
“The fire ignitions and eventual perimeters engulfed several high-value neighborhoods,” explains the Gallagher Re report. “Average property values in some of the hardest-hit areas included Pacific Palisades ($3.5 million), Malibu ($3.2 million), and Altadena ($1.3 million).” Data from the California FAIR plan reports that the Pacific Palisades area carried almost $6 billion in exposure, making it the fifth-largest concentration of FAIR policies in the state as of Sept. 2024. “By February, the FAIR Plan had already received nearly 4,800 claims with a total loss of up to $4 billion,” states Gallagher Re.
Other Perils
Another $10 billion in insured losses were generated by multiple SCS outbreaks across the U.S. “Natural catastrophes in the [U.S.] accounted for roughly 95% of global insured losses in the first quarter of 2025, reaching approximately $50 billion,” Aon reports. “This was more than six times higher than the long-term average since 2000. Meanwhile, Q1 insured losses in all other regions were significantly lower compared to their long-term averages.”
At least six events, all in the U.S., cost over $1 billion in insured losses. Gallagher Re, however, reports that there were four other global events which were billion-dollar losses for insurers, all of which were SCS that took place in the U.S.: “the mid-March tornado outbreak ($5.4 billion); a late March U.S. SCS outbreak ($1.2 billion); and a sprawling mid-February storm complex, where SCS losses were the dominant driver ($1.1 billion); as well as an SCS outbreak which occurred in early March ($1.0 billion).”
The costliest event, according to Gallagher Re, was the March 13-16 U.S. tornado outbreak, which “spawned at least 117 tornadoes across 14 states. These included 11 rated EF3 and three rated EF4.” Forty-three lives were lost, and insured losses are expected to reach $5.4 billion.
Gallagher Re notes that more volatile weather tends to begin in the spring and summer months (Q2 and Q3), with SCS, drought, and hurricanes becoming a focal point for the U.S., the insurance industry’s most active and expensive market. “Q1 is not usually a major driver of weather/climate insurance losses; in the past decade it has accounted for just 15% of the annual total.”
Preliminary data from the Storm Prediction Center (SPC) “indicates that Q1 saw a well above average number of tornado and straight-line wind reports, and a slightly above average number of hail reports when compared to the last decade (2015-2024).” The rising financial cost of SCS, notes Gallagher Re, is due to not only climate change, but also “socioeconomic factors such as expanding urban footprints and continued growth in housing units. This is in tandem with the increasing costs of construction materials and labor, higher inflation, and greater societal wealth.”
Furthermore, forecast models indicate that ENSO-neutral conditions should remain until the start of the Atlantic Hurricane Season, with a near equal chance of ENSO-weak or weak La Nina conditions in place by end of calendar year 2025,” according to Gallagher Re. The National Oceanic and Atmospheric Administration (NOAA) “projects that 2025 has a 99.9% change of ending as one of the top-five warmest years on record.”
The Role of Weather Forecasting
“Weather forecasting plays a crucial role in mitigating losses from natural disasters by providing timely and accurate information that can help in preparation and response efforts,” states Aon. “This results in enhanced early warning systems, effective pre-event planning, resource allocation, and improved risk assessment, all to lessen economic impacts and ensure public safety.” AI-based weather forecast models created to complement traditional models can be beneficial additions for future events.
The SCS outbreak on March 14-16, for instance, was noteworthy because of how well in advance the National Weather Service (NWS) and Storm Prediction Center (SPC) forecasted the impacts, with the risk being identified as early as six days before the event. Convective outlooks released by the SPC were accurate, and they issued a rare “high risk” for severe weather a day in advance, according to Aon.
Estimates from both reports are considered preliminary and are subject to change.