Overview of Natural Catastrophe (Nat Cat) Risks in 2026
Natural catastrophe risks in 2026 are characterized by continuing escalation in loss trends, driven by a combination of climate change, socio-economic factors like urbanization and population growth in high-risk areas, and the rising prominence of secondary perils (e.g., severe convective storms, wildfires, flash floods). Experts anticipate above-average global economic losses, with insured losses potentially continuing the multi-year streak above $100-150 billion annually, though volatility remains high due to unpredictable event frequency and intensity.
Recent Trends Leading into 2026
- 2024: Global economic losses from natural disasters reached ~$320 billion, with insured losses ~$140 billion (well above long-term averages). Weather-related events accounted for over 90% of losses.
- 2025 (preliminary): An exceptionally costly year so far, with first-half insured losses estimated at $80-100 billion (nearly double the 10-year average). Key events included massive Los Angeles wildfires (costliest ever for wildfires, ~$40-53 billion insured/economic), severe U.S. thunderstorms, hurricanes (e.g., Helene and Milton), and international floods/earthquakes. Full-year insured losses trended toward $145-150 billion if patterns held.
- Long-term: Insured losses have grown 5-7% annually (inflation-adjusted) for decades, with secondary perils now driving much of the upward trend rather than just peak perils like major hurricanes or earthquakes.
Key Drivers of Escalating Losses
- Climate Change: Increasing frequency and severity of weather events (e.g., more intense storms, unseasonal wildfires, rapid hurricane intensification). Research links warmer oceans and atmosphere to higher probabilities of extreme events.
- Socio-Economic Factors: Population growth, urbanization, and asset concentration in vulnerable areas (e.g., coastal zones, wildfire-prone regions) amplify insured losses more than hazard changes alone.
- Secondary Perils Dominance: Events like severe thunderstorms (now annual mid-double-digit billion losses in the U.S.) and urban flooding are overtaking traditional peak perils in cumulative impact.
Uncertainty for 2026
- Volatility: Nat cat events are inherently unpredictable; a quiet year could keep losses near averages, while major events (e.g., active Atlantic hurricane season or large earthquakes) could push them far higher.
- Reinsurance Market Dynamics: Heading into January 2026 renewals, the market shows resilience with ample capacity and strong reinsurer capital (ROE 17-18% expected for 2025). Property cat reinsurance rates are softening (minor declines or 5-15% risk-adjusted reductions observed in 2025), but discipline on terms/attachments persists. Loss-impacted programs may see limited relief, while well-performing ones benefit more.
- Potential Peak Year: Some analysts note the last major peak (2017) was followed by years of elevated but sub-peak losses; 2026 could approach similar highs if secondary perils accumulate rapidly.
Outlook and Implications
Experts from firms like HDI Global, Swiss Re, Munich Re, and Gallagher Re expect continuation of recent trends: above-average economic losses, insured losses shaped heavily by secondary perils and urbanization, and ongoing pressure on affordability/availability in high-risk areas. Robust risk management, adaptation (e.g., resilient building codes), and mitigation investments are emphasized to curb future escalation.
While reinsurance capacity supports coverage, sustained high losses could strain primary markets, widening protection gaps in underinsured regions. Overall, 2026 underscores the need for proactive strategies amid a “regime shift” of persistent inflation, fragile growth, and intensifying climate threats.