Catastrophic events such as floods, earthquakes, and hurricanes are expensive ordeals, yet they remain economically manageable provided they steer clear of occurring.
In the first half of 2025, the world witnessed a significant surge in natural disaster damages, with approximately $131 billion (about 113 billion euros) in overall losses reported. This figure, the second highest since records began in 1980, is a stark reminder of the increasing impact of climate change on our planet.
Munich Re, a leading reinsurer, has conducted an analysis that reveals insured losses of $80 billion, a figure that underscores the economic consequences of these catastrophic events. Weather-related disasters accounted for 88% of overall losses and 98% of insured losses, making them the dominant factor in economic damage from natural catastrophes.
The costliest single event was the winter wildfires near Los Angeles, causing an estimated $53 billion in total losses and $40 billion insured—nearly double the previous global record for wildfire losses set in 2018.
Experts at Munich Re attribute this trend to global warming, which is causing an increase in weather-related natural disasters. Tobias Grimm, the company's chief climatologist, stated that these increasing damages from weather disasters are the "new normal."
The USA was particularly hard hit, with total damages amounting to $92 billion, representing 70% of the global total. Europe, despite relatively low damages, is not free from risk, as stated by Grimm. There was no major weather disaster in Europe in the first six months of 2025.
However, the story does not end with these direct losses. Broader estimates of climate-related economic impacts by Munich Re and Swiss Re approximate annual global losses from climate-related hazards at around $250 billion, or 0.25% of global GDP. These direct loss figures may underestimate the full economic damage, since indirect and chronic effects (such as productivity losses due to sustained climate change) are likely much higher and less well quantified.
Munich Re and experts emphasize the growing role of climate change in driving these extreme, costly weather events. They advocate for better adaptation measures including stronger construction standards and restricting new development in high-risk areas to manage rising insurance costs and reduce future financial exposure.
In the Alps, for instance, climate change is causing the permafrost to retreat, which loosens rocks and increases the risk of natural disasters. Similarly, the contrast of air masses in North America, with tropical warm and moist air from the Gulf of Mexico meeting unchecked cold air masses from Canada, creates a unique environment for severe weather events.
The earthquake in Myanmar on March 28 resulted in 4,500 deaths, serving as a grim reminder of the human cost of these disasters. As we move forward, it is crucial to prioritise resilience and mitigation efforts to protect both lives and livelihoods from the impacts of climate change.
[1] Munich Re (2025). Natural Catastrophes and Man-made Disasters in the First Half of 2025. [Online]. Available: https://www.munichre.com/en/media-centre/press-releases/2025/07/natural-catastrophes-and-man-made-disasters-in-the-first-half-of-2025-1343227.html
[2] Swiss Re (2025). Sigma Series: The Impact of Climate Change on the Insurance Industry. [Online]. Available: https://www.swissre.com/institutional/en/research-and-thought-leadership/sigma/sigma-studies/impact-of-climate-change-on-the-insurance-industry.html
[3] Intergovernmental Panel on Climate Change (IPCC) (2021). Climate Change 2021: The Physical Science Basis. [Online]. Available: https://www.ipcc.ch/report/ar6/wg1/
- To mitigate the economic consequences of natural disasters exacerbated by climate change, Munich Re advises implementing employment policies within the insurance industry that focus on climate-change research, environmental-science, and finance, as well as community policies aimed at strengthening construction standards and restricting development in high-risk areas.
- In order to build resilience against the impacts of climate change, it is essential to prioritize employment opportunities in fields such as science, climate-change, and environmental-science, as well as implement community policies that focus on adapting to climate change and reducing financial exposure.
