Severe Convective Storms Now the Costliest Insured Peril of the 21st Century, Aon Reports

Rhea-AI Summary

Aon (NYSE: AON) launched its 2026 Climate and Catastrophe Insight report, finding severe convective storms (SCS) have become the costliest insured peril of the 21st century, overtaking tropical cyclones.

Global economic losses in 2025 were $260B with insured losses of $127B (sixth consecutive year >$100B). SCS caused $61B of insured losses in 2025. California wildfires produced $58B economic and $41B insured losses. The U.S. accounted for >54% of global economic losses and $103B of insured losses. The report highlights parametric cover and alternative risk transfer as key resilience tools.

Positive

• SCS now the costliest insured peril of the 21st century
• Insured losses totaled $127B in 2025, sixth year >$100B
• Parametric/cat bond liquidity: Jamaica secured >$650M within two months
• U.S. insured losses of $103B (81% of global industry losses)

Negative

• Protection gap remained at 51%, leaving millions uninsured
• California wildfires caused $41B in insured losses
• Thirty $1B insured-loss events in 2025, well above historical average

News Market Reaction

-1.27%

1 alert

-1.27% News Effect

On the day this news was published, AON declined 1.27%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Global economic losses 2025: $260 billion Global insured losses 2025: $127 billion SCS insured losses 2025: $61 billion +5 more

8 metrics

Global economic losses 2025 $260 billion Global natural disasters economic losses in 2025

Global insured losses 2025 $127 billion Global insured natural disaster losses in 2025

SCS insured losses 2025 $61 billion Global severe convective storms insured losses in 2025

California wildfire economic losses $58 billion Palisades and Eaton Fires economic losses

California wildfire insured losses $41 billion Palisades and Eaton Fires insured losses

Hurricane Melissa economic losses $11 billion Economic damages in the Americas

Hurricane Melissa insured losses $2.5 billion Insured losses in Jamaica, Cuba and elsewhere

Jamaica catastrophe bond liquidity $650 million Liquidity secured within two months after Hurricane Melissa

Market Reality Check

Price: $310.34 Vol: Volume 853,701 is broadly...

normal vol

$310.34 Last Close

Volume Volume 853,701 is broadly in line with the 20-day average of 858,652 (relative volume 0.99). normal

Technical Shares trade below the 200-day MA of 356.96 with the current price at 343.86, about 16.73% under the 52-week high.

Peers on Argus

AON slipped 0.28% while close peers were mixed: AJG up 1.29%, WTW up 0.37%, BRO ...

AON slipped 0.28% while close peers were mixed: AJG up 1.29%, WTW up 0.37%, BRO up 0.77%, ERIE up 0.44%, and MMC down 1.36%. With no peers in the momentum scanner and no same-day peer headlines, trading appears more stock-specific than part of a broad broker-sector move.

Historical Context

5 past events · Latest: Jan 15 (Neutral)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Jan 15	Debt redemption	Neutral	-0.3%	Announced full redemption and delisting of 2.875% senior notes due 2026.
Jan 14	Product expansion	Neutral	+0.4%	Expanded Data Center Lifecycle Insurance Program capacity to $2.5 billion.
Jan 13	Industry study	Neutral	+0.4%	Opened Q1 2026 U.S. Insurance Labor Market Study for carrier participation.
Jan 13	Healthcare research	Neutral	-1.7%	Released GLP-1 claims analysis on clinical outcomes and employer cost impacts.
Jan 09	Earnings schedule	Neutral	-0.1%	Announced Q4 and full-year 2025 earnings release and conference call date.

Pattern Detected

Recent AON headlines have been operational and strategic with relatively small next-day price moves, showing no strong pattern of large reactions to routine news.

Recent Company History

Over the past few weeks, AON’s news flow has focused on capital structure, product expansion, research and upcoming earnings. The company announced full redemption of its 2.875% Senior Notes due 2026, expanded a data center insurance program to $2.5 billion, opened the Q1 2026 insurance labor market study, and published GLP-1 research with clinical and employer-cost insights. An earnings release date for Q4 and full-year 2025 was also set. The current climate and catastrophe report fits this pattern of analytical and franchise-strengthening updates rather than discrete one-off catalysts.

Market Pulse Summary

This announcement details AON’s climate and catastrophe insight work, emphasizing $260 billion of 20...

Analysis

This announcement details AON’s climate and catastrophe insight work, emphasizing $260 billion of 2025 economic losses, $127 billion insured losses and the growing impact of severe convective storms and wildfires. It underscores opportunities in analytics, alternative risk transfer and parametric structures. In context of recent operational news, it reinforces AON’s advisory and risk-transfer franchise. Investors may watch how such insights translate into reinsurance, consulting and capital markets mandates over time, alongside upcoming earnings disclosures.

Key Terms

severe convective storms, parametric insurance products, catastrophe bond, protection gap, +1 more

5 terms

severe convective storms technical

"revealing that severe convective storms (SCS) have surpassed tropical cyclones"

Severe convective storms are intense weather systems—think powerful thunderstorms—that can produce damaging straight-line winds, large hail, flash flooding, and sometimes tornadoes. For investors they matter because these storms can abruptly disrupt supply chains, damage factories, utilities, crops and property, and prompt large insurance claims, all of which can affect company revenues, commodity prices and short-term market valuations much like a sudden mechanical failure can halt a factory.

parametric insurance products financial

"Parametric insurance products — which release funds automatically when specified"

Parametric insurance products pay a fixed or pre-agreed amount when a measurable event crosses a defined threshold (for example, wind speed, earthquake magnitude, or rainfall), rather than reimbursing actual measured losses. Like a weather-triggered coupon that redeems when a gauge hits a level, they deliver fast, predictable cash to cover disruption or hedging needs, which matters to investors because they reduce uncertainty, speed recovery, and can stabilize a company’s cash flow and risk profile.

catastrophe bond financial

"as a result of catastrophe bond protection with a parametric trigger"

A catastrophe bond is a type of bond sold by insurers or reinsurers that lets investors take on the financial risk of a specified natural disaster in exchange for higher interest payments; if the disaster happens, investors can lose part or all of their initial investment to cover insurer losses. It matters to investors because these bonds can pay attractive returns and behave differently from stocks and bonds, offering portfolio diversification—but they carry the real chance of a sudden, large loss, like collecting premium for an insurance policy that pays out if a house in a risky neighborhood burns down.

protection gap financial

"deploy capital more effectively and close longstanding protection gaps"

The protection gap is the difference between the total economic loss from an event (like a natural disaster, health crisis, or liability claim) and the portion covered by insurance or other risk-transfer tools. For investors it signals how much financial exposure remains unshielded—think of an umbrella with holes—so a large protection gap can mean bigger out-of-pocket losses for businesses and consumers, greater market volatility, and potential opportunity for insurers and risk-management firms.

insured peril financial

"become the costliest insured peril of the 21st century"

An insured peril is a specific event or cause of loss that an insurance policy explicitly covers—examples include fire, theft, flood, or a covered illness. For investors, whether an occurrence qualifies as an insured peril determines if an insurer or company must pay claims, which affects cash outflows, reserve levels and profit volatility; think of it like a warranty that only pays when the exact listed problem happens.

AI-generated analysis. Not financial advice.

New findings show natural hazards such as SCS and wildfire are reshaping global loss patterns and intensifying need for both physical and financial resilience

DUBLIN, Jan. 20, 2026 /PRNewswire/ -- Aon plc (NYSE: AON), a leading global professional services firm, today launched its annual Climate and Catastrophe Insight report, revealing that severe convective storms (SCS) have surpassed tropical cyclones to become the costliest insured peril of the 21st century.

The report shows how increasingly common, high–volume events are reshaping global loss patterns and highlights the critical importance of both physical and financial resilience to help organizations manage volatility and unlock insurability.

Global economic losses from natural disasters reached $260 billion in 2025 — the lowest since 2015 — yet insured losses remained elevated at $127 billion, marking the sixth consecutive year that insurance payouts exceeded the $100 billion threshold. This divergence reflects how concentrated, high–severity frequency peril events — particularly in the United States — continue to drive substantial insured loss even in below–average hazard years. In many regions, especially emerging markets, more than half of economic losses remained uninsured, leaving millions exposed to financial risk.

By quantifying the return on investment of mitigation measures and demonstrating credible loss reduction to insurers and capital providers, organizations can reshape how risk is financed and unlock more affordable, sustainable insurance coverage. This creates opportunities for the industry to deploy capital more effectively and close longstanding protection gaps.

"This year's report highlights the growing need for collaboration among organizations, insurers, governments and communities," said Greg Case, president and CEO of Aon. "The insurance industry is well-positioned to act as a strategic partner to help navigate these challenges, bringing record levels of capital to help clients respond to weather risks and build increasingly diverse alternative risk transfer solutions to strengthen resilience in the face of a changing climate."

Key findings from the report include:

• Severe convective storms (SCS) have overtaken tropical cyclones as the costliest insured peril of the 21st century, driven by high–frequency, high–severity outbreaks in the U.S. In 2025 alone, SCS generated $61 billion in insured losses globally, the third–highest SCS total on record.
• Insurers covered nearly half of global economic losses in 2025, leaving a protection gap of 51%, the lowest on record. This was a result of concentrated high-impact events in the U.S.
• 49 billion–dollar economic–loss events occurred in 2025 (above the long–term average of 46), while 30 billion–dollar insured–loss events far exceeded the historical average of 17 — underscoring the accumulation effect of increasingly frequent, medium–sized catastrophes.
• Wildfires in California (Palisades and Eaton Fires) were the costliest events of the year, causing $58 billion in economic losses and $41 billion in insured losses, making them the most expensive wildfires ever recorded globally.
• Global fatalities totaled 42,000 driven primarily by earthquakes and heatwaves — 45 percent below the 21st–century average. The Myanmar earthquake was the deadliest event apart from heatwaves, claiming 5,456 lives.
• Extreme heat caused more than 25,000 deaths globally and remained a major driver of natural–disaster–related mortality, as 2025 ranked as the third–hottest year on record.

The report also provides insights into regional trends, where key findings include:

• U.S.: More than 54 percent of global economic losses occurred in the U.S., with above-average losses driven by wildfires and SCS. Insured losses reached $103 billion, representing 81 percent of global industry losses.
• Americas: Hurricane Melissa was the region's costliest event, with $11 billion in economic damages and $2.5 billion insured losses in Jamaica, Cuba and elsewhere. South America experienced significant drought impacts, led by Brazil's prolonged drought with approximately $5 billion in agricultural losses. Severe flooding events hit Mexico, Ecuador and Bolivia.
• EMEA: Economic losses were well below long–term averages, with SCS as the costliest peril and additional losses driven by drought, heatwaves and wildfires across southern Europe.
• APAC: The Myanmar earthquake was the deadliest global event except for heatwaves, with $15.7 billion in economic losses. Flooding in China and cyclones in South and Southeast Asia also drove significant losses. Australia experienced two billion-dollar insured loss events.

The 2026 Climate and Catastrophe Insight report reveals that alternative risk transfer is increasingly critical for providing the capital needed to help organizations mitigate risk and strengthen resilience. Parametric insurance products — which release funds automatically when specified trigger conditions are met — proved critical during events such as Hurricane Melissa, enabling rapid recovery for affected communities. Jamaica, for instance, secured more than $650 million in liquidity within two months of landfall as a result of catastrophe bond protection with a parametric trigger.

As well as encouraging alternative risk management solutions, the report calls for increased resilience via smarter technology and stronger infrastructure; better forecasting, resilient building standards and modernized infrastructure to reduce long-term damage and assist communities and businesses to recover faster.

"Resilience today must be both physical and financial," said Michal Lorinc, head of Aon's catastrophe insight and author of the report. "Organizations are urged to embed adaptation into their workforce and location strategies, invest in predictive analytics and encourage cross-functional approaches to weather risk. As climate events continue to affect people and property, the opportunity lies in using data to strengthen preparedness, rethink risk management strategies and build partnerships that support faster recovery and long-term resilience."

For further details, see the full 2026 Climate and Catastrophe Insight report: https://aon.io/3LUFi5A

For information about Aon's Reinsurance Solutions: https://www.aon.com/en/capabilities/reinsurance 

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.

Follow Aon on LinkedIn, X, Facebook and Instagram. Stay up-to-date by visiting Aon's newsroom and sign up for news alerts here.

Aon UK Limited is authorised and regulated by the Financial Conduct Authority for the provision of regulated products and services in the UK. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN. Tel: 020 7623 5500.

Media Contact
Andrew Wragg
+44 (0) 7595 217168
andrew.wragg@aon.com 

 

 

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SOURCE Aon plc

FAQ

What did Aon's 2026 report say about severe convective storms and AON stock (NYSE: AON)?

The report states SCS have overtaken tropical cyclones as the costliest insured peril of the 21st century, driven by U.S. outbreaks; this shifts industry loss patterns relevant to AON's reinsurance and advisory services.

How large were global insured losses in 2025 according to Aon's report and how does that affect AON (NYSE: AON) clients?

Global insured losses were $127B in 2025, maintaining >$100B for six consecutive years, increasing demand for AON's risk transfer and resilience solutions.

What were the financial impacts of the 2025 California wildfires reported by Aon and implications for AON (NYSE: AON)?

California wildfires caused $58B in economic losses and $41B insured losses, representing the costliest wildfires on record and stressing insurer capital and advisory needs.

How did parametric insurance perform in 2025 and what examples did Aon give relevant to AON (NYSE: AON) clients?

Parametric products proved critical for rapid liquidity; Jamaica accessed more than $650M via catastrophe bond parametric protection within two months of Hurricane Melissa.

What geographic regions drove the 2025 losses in Aon's 2026 report and why does this matter for AON (NYSE: AON)?

The U.S. accounted for >54% of economic losses and $103B insured losses; other notable impacts occurred in APAC (Myanmar earthquake) and the Americas (Hurricane Melissa, Brazil drought), informing regional risk strategies.

What actions does Aon's report recommend for companies and insurers and how could that influence AON (NYSE: AON) services?

The report urges investment in physical resilience, predictive analytics, resilient building standards, and alternative risk transfer—areas that can increase demand for AON's consulting and reinsurance placement services.