2025 wildfires, flooding and severe storms lead to insured losses of $88B

In addition to being a turbulent political year, 2025 proved to be one of the costliest years for insurers in terms of natural disasters, resulting in overall losses of $118 billion, with insured losses totaling $88 billion.

The wildfires in the Los Angeles area in January constituted by far the costliest natural disaster of the year, according to new data from Munich Reinsurance. A hazardous combination of drought and strong winter winds created ideal conditions for wildfires. After the fires began in early January, storms fanned the flames farther and farther into the LA suburbs. Overall losses totaled approximately $53 billion, including insured losses of roughly $40 billion. It is the most expensive wildfire disaster to date; 30 people lost their lives.

“There are things people can do before building a home or business that would help mitigate the risks. For wildfires, for example. there should be a minimum of flammable materials within six feet of your home, clear debris from under decks, use double-pane windows and keep tree limbs from hanging over the house,” said Mark Bove, meteorologist & senior vice president, Natural Catastrophe Solutions, Munich Reinsurance America, Inc.

Tornadoes and hail rack up $50B in damage

“While wildfires caused significant loss for insured, larger losses of $50 billion occurred from tornadoes and hail,” Bove said. He noted that about 55,000 homes have been lost to wildfires since 2017. Prior to that date, only about 5,000 homes were destroyed by wildfires.

More than 100 tornadoes occurred over several days in March in central southern U.S. states – including a few in the second most severe category, EF4, with windspeeds far above 200 kilometers per hour. Losses amounted to around $9.4 billion, of which $7 billion was insured.

Aggregated severe thunderstorm losses in the United States amounted to $56 billion in 2025, of which $42 billion was insured – significantly higher than the 10-year average (overall losses: $39 billion; insured losses: $29 billion).

When it comes to wind, Bove recommended that other states adopt the Florida building codes, which have helped to lessen the severity of wind damage in that state. Adopted 20 years ago, it includes certain requirements for new buildings, like hurricane shutters, double-pane windows, and having the roof bolted to the walls. He said doing these things doesn’t add much to the overall cost of a new building.

At around 50% of total losses, uninsured losses were lower than the 10-year average of around 60% due to the high percentage of insured losses attributable to the Los Angeles wildfires. Disregarding this loss event, the insurance gap matched the 10-year average.

Hurricanes, climate change spur insured losses

Climate change also proved to be an issue, with 2025 being one of the warmest years ever. Bove said climate change will continue to be an issue. “We are trapping more heat and fundamentally changing our environment. The increased moisture in the gulf will continue to cause more extreme flash flooding,” he said.

Three hurricanes of the highest category 5 developed in the tropical North Atlantic in 2025. There had not been so many extreme hurricanes here since 2005, when the New Orleans region was devastated by Hurricane Katrina – which remains one of the costliest natural disasters of all time.

For the first time in 10 years, no hurricanes struck the U.S. mainland. Thanks to no hurricanes making landfall, last year’s loss totals were significantly below the 10-year and 30-year averages, when adjusted for inflation (overall losses $106 billion/ $69 billion; insured losses $42 billion/$26 billion).

“I worry about the severity of storms going forward. We need to push for better-informed customers when it comes to making homes and businesses being weather-ready,” Bove said.

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