Nat cat losses may be rising slowly
Global insured natural catastrophe losses fell well below trend in the first half of 2026, with estimated losses reaching $42 billion, according to the Swiss Re Institute. This loss is 16% below the 10-year average and the lowest first-half total since 2020.
Severe convective storms were the single biggest driver at an estimated $28 billion, also below long-run trend. The below-trend result was partly a function of geography rather than reduced hazard.
Storm activity across the US remained above average, but relatively few of the highest-impact events struck Texas, the Southern Plains, or the Southeast. Those regions typically generate the largest insured losses because storms combine high frequency with high concentrations of insured assets.
Insurance covered approximately 42% of first-half economic losses, above the 30-year average of 33%. The ratio reflects the concentration of damage in highly insured markets rather than a structural improvement in global coverage.
The damage in Venezuela illustrates the protection gap directly. An earthquake sequence there caused an estimated $20 billion in economic losses. Low insurance penetration means only a small share of that damage is expected to be insured.
Balz Grollimund, Head Catastrophe Perils at Swiss Re, said the below-trend figure should not be read as a signal that risk had diminished. “A less costly first half of the year does not mean the risk has gone away,” Grollimund said.
Swiss Re Institute identifies wildfire as the fastest-growing weather peril globally. Insured wildfire losses in Europe have grown by an estimated 8% to 11% per year in real terms since 1970, according to the research.
Europe now experiences 64% more hot days, defined as days reaching 30°C or above, than in the 1950s. June’s record heat and persistent dry conditions in western Europe set up an active wildfire season.
Major fires affected France and Spain in July. Grollimund said, “Europe’s recent wildfires highlight how hotter and drier conditions are making large wildfires more likely and, with more homes, businesses and infrastructure built in risk-exposed areas, also more costly.”
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The quiet first half does not reduce the risk of a costly full year. Historically, the second half accounts for an average of 58% of global insured nat cat losses, driven primarily by North Atlantic hurricanes.
El Niño conditions tend to suppress Atlantic hurricane activity, but they do not eliminate landfall risk. Some 22% of US hurricane landfalls since 1950 occurred during El Niño years.
El Niño can also shift risk toward the Central and East Pacific and alter flood and wildfire patterns elsewhere. El Niño is expected to strengthen through the end of 2026, with a 97% probability it persists into early 2027, redistributing catastrophe risk away from the Atlantic and toward the Pacific, drought and wildfire.
The long-term cost drivers, growing exposure in hazard-prone areas and rising reconstruction costs, remain in place regardless of seasonal conditions.
The specific numbers in this report are global, but the underlying lesson applies to every market: a quiet first half is not evidence that renewal pricing should soften.
For brokers with clients holding wildfire-exposed property, the 8-11% annual real-terms growth figure is a relevant number.
As the insurance industry continues to deal with the complexities of natural catastrophe risks, it’s essential to consider the broader trends and factors that influence these events.
They will need to adapt to these changes to provide effective coverage.
