Europe's insurance industry grapples with record $171 billion in annual losses

Europe's insurance industry faces a growing threat from catastrophes as average annual insured losses have surged by $19 billion, reaching $171 billion, according to the latest report from Verisk, a leading data analytics firm. This marks the highest estimate ever reported by Verisk and highlights a concerning trend that extends beyond the impact of single major events.

In 2025, despite a relatively quiet hurricane season in the U.S., which typically drives much of the global insurance losses, Europe saw a steady increase in insured losses driven by a combination of factors. Rob Newbold, president of Verisk's Catastrophe and Risk Solutions, emphasized that even in years without significant U.S. hurricane activity, the underlying risk landscape has changed.

"Markets can be misled into a false sense of security during quiet seasons," Newbold noted. "The risk environment has become more dynamic, with record-setting wildfires and severe thunderstorms contributing significantly to the total."

The 2026 Global Modelled Catastrophe Losses Report, released by Verisk, underscores that the $171 billion figure represents a long-term estimate of potential losses, derived from comprehensive simulations across the company's global models. This benchmark serves as a critical tool for insurers to assess and prepare for a wide range of events.

Of the $171 billion, the United States accounts for the majority of the risk, with $117 billion (68%) attributed to the country. Severe thunderstorms dominate the peril landscape, contributing 40% of the global insured catastrophe risk, followed by tropical cyclones at 27%, earthquakes at 10%, and other perils. In 2025, these frequency perils drove the majority of industry losses, underscoring the changing nature of risk.

Several long-term trends are driving this increase in potential losses. Property exposure in the countries Verisk models has grown by about 7% annually since 2021, thanks to new construction and rising asset values. In the U.S., residential reconstruction costs have also risen by about 5% annually, outpacing consumer inflation. Additionally, more people and property are concentrated in hazardous areas, with 7.1% of single-family houses in England already located in the 100-year floodplain.

These factors, combined with ongoing climate change, are pushing up insured losses independently of weather patterns. For instance, Verisk's models suggest that a significant U.S. landfalling hurricane could push annual insured losses to approximately $200 billion, well above the range of $107-$129 billion reported for 2025.

The report also highlights a persistent global protection gap. Globally, only about 38% of economic losses from natural catastrophes are insured, corresponding to an estimated $450 billion in economic AAL. In Europe, the gap is even wider, with only about $24 billion (22%) of the region's expected $110 billion in annual economic catastrophe losses currently insured.

Verisk's findings underscore the need for broader access to insurance and a clearer understanding of risk. "Narrowing the protection gap requires expanding model coverage and making both Verisk and third-party models available through our platforms," said Newbold. "This helps insurers evaluate risk in more markets and identify opportunities to extend coverage to communities that remain underinsured."

The 2026 Global Modelled Catastrophe Losses Report is produced using the same suite of catastrophe models and software that Verisk's clients rely on daily, covering more than 120 countries and regions. The full report is available for review, providing a comprehensive view of the global risk landscape.