The financial cost of natural catastrophes to start 2025 was notably elevated, with global economic losses reaching USD110 billion. This total marks the third-costliest Q1 since 2000 and significantly exceeds the recent 10-year Q1 average of USD55 billion. A major driver was the unprecedented wildfire activity in the greater Los Angeles, California metro area during January, which accounted for an estimated USD65 billion in economic losses and up to USD40 billion in insured losses. This time was the first on record that wildfire was the costliest global peril in a first quarter.
The heightened early-calendar-year insured losses, which were substantially higher than the Q1 decadal average of USD20 billion, remained manageable for the re/insurance industry. However, these losses denote a costly start to the year, with the months of historically peak natural catastrophe losses still ahead.
While NOAA has declared an official end to La Niña and El Niño-Southern Oscillation (ENSO)-neutral conditions currently in place, global land and ocean temperatures are expected to remain among the highest on record. These temperatures are expected to contribute to conditions favoring an average-to-above-average Atlantic hurricane season.
In this quarter's report, we review:
- Key global and regional drivers of catastrophe losses, including wildfires, earthquakes, and severe convective storm temperatures
- How the current phase of ENSO is shaping near-term weather and climate risk
- The relationship between natural peril activity and reinsurance market conditions
- Record global temperatures' potential influence on weather and climate events during the remainder of the year