Europe's Insured Losses Are Climbing as Catastrophes, Inflation and Construction Costs Combine, Verisk Finds
Rhea-AI Summary
Verisk (Nasdaq: VRSK) released its 2026 Global Modelled Catastrophe Losses Report, estimating insurers should be prepared for $171 billion in average annual insured catastrophe losses, up $19 billion year over year and the highest benchmark Verisk has reported.
The report attributes $117 billion (68%) of global insured AAL to the U.S. and identifies severe thunderstorm as the largest peril, contributing 40% of modelled risk. At the 100‑year return period, modelled insured losses reach $477 billion, and $606 billion at the 250‑year level.
Verisk cites exposure growth of roughly 7% annually since 2021 in modelled countries, U.S. reconstruction costs rising about 5% annually, and continued development in hazard‑prone areas as key drivers. The report also highlights a protection gap: only about 38% of global economic catastrophe losses are insured, and in Europe just $24 billion of $110 billion expected annual economic losses (22%) are insured. Verisk’s figures are derived from its global catastrophe models covering more than 120 countries and regions.
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Key Figures
Historical Context
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Aug 10 | Legal ruling | Negative | -5.5% | Delaware Chancery Court ruling preceded a 5.55% 24-hour decline. |
| Aug 06 | Cargo theft losses | Negative | +0.5% | Reported cargo losses more than doubled despite fewer theft incidents. |
| Aug 02 | Earthquake loss estimate | Neutral | -0.9% | Verisk estimated insured losses from Japan's Kumamoto earthquake. |
| Jul 29 | 2Q26 earnings | Positive | +0.4% | Quarterly results included revenue growth and reaffirmed full-year guidance. |
| Jul 29 | Acquisition announcement | Positive | +0.4% | Verisk acquired McKenzie Intelligence Services for catastrophe response capabilities. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Historical reactions were mixed: the legal-ruling headline preceded a sharp decline, while earnings and acquisition announcements each recorded 0.42% gains.
Key Terms
average annual loss technical
protection gap financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
- Average annual insured catastrophe losses increased by approximately
$19 billion in a year, the highest estimate Verisk has reported to date - Despite no single catastrophe dominating Europe’s 2025 losses, near-present climate models show frequency perils carrying more risk than the historical records suggest.
- Exposure growth, rising reconstruction costs and continued development in catastrophe-prone areas are pushing potential losses higher, regardless of weather patterns in any single year
LONDON, Sept. 01, 2026 (GLOBE NEWSWIRE) -- The catastrophe modelling business unit of Verisk (Nasdaq: VRSK), a leading data analytics and technology provider to the global insurance industry, today released Verisk's 2026 Global Modelled Catastrophe Losses Report. The annual report calculates that the insurance industry should be prepared to withstand
“A quiet hurricane season can lead markets to respond as if risk has eased: rates soften, insurers keep more risk on their own books, and more capital competes to write new business,” said Rob Newbold, president of Verisk Catastrophe and Risk Solutions. “But 2025 reminds us that the underlying risk landscape has changed and years without significant losses from U.S. hurricane activity no longer signal a quieter catastrophe environment.”
For the sixth straight year, global insured catastrophe losses exceeded
“A more dynamic risk environment underscores how catastrophe models help insurers maintain underwriting discipline and make informed pricing, capital allocation and risk transfer decisions based on the full range of risk, not just the outcome of a single season,” Newbold added.
Understanding Verisk's
The report’s headline figure is Verisk’s global insured average annual loss, or AAL: a modelled, long-term estimate of catastrophe risk derived from simulations across the company’s global suite of models. It is not a prediction of losses in 2026 or in any other individual year; rather, it serves as a benchmark insurers can use to evaluate potential losses across a wide range of events, perils and regions.
Several additional insights help put the number into context:
- The United States accounts for the majority of modelled insured catastrophe risk. Of the
$171 billion global insured AAL,$117 billion (68 percent) is attributed to the U.S.
- Severe thunderstorm accounts for 40 percent of modelled insured catastrophe risk, more than any other peril. It remains the largest contributor to Verisk's global insured AAL, ahead of tropical cyclone (27 percent), earthquake (10 percent), winter storm (9 percent), flood (7 percent) and wildfire (6 percent). The pattern held in 2025, when frequency perils, rather than a single hurricane, drove industry losses.
- A severe catastrophe year could generate losses nearly three times higher than the global insured AAL. The report also examines increasingly severe but plausible loss scenarios: At the 100-year return period – commonly used in the industry to describe a scenario with a 1 percent annual likelihood – modelled aggregate insured losses reach
$477 billion . At the 250-year return period, losses reach$606 billion .
Since Verisk first published this report in 2012, the estimated global insured AAL has nearly tripled, rising from
What's Driving Higher Losses Beyond the Hazard
Catastrophe losses are shaped by more than the number or severity of storms, wildfires or earthquakes in a given year. Several long-term trends continue to increase the value of property at risk and the potential cost of future catastrophes:
- There is more property to insure. Property exposure in the countries Verisk models has grown roughly 7 percent annually since 2021, driven by both new construction and rising asset values.
- The cost of rebuilding keeps increasing. In the United States, residential reconstruction costs have risen about 5 percent annually since 2021, outpacing consumer inflation and increasing the potential cost of catastrophe losses even when hazard activity remains unchanged.
- More people and property are concentrated in hazard-prone areas. Population growth continues to be concentrated in catastrophe-exposed regions, while development expands in flood plains, wildfire zones and other high-risk locations. In England, for example, 7.1 percent of single-family houses already sit in the 100-year flood plain, and one in nine new houses built between 2022 and 2024 was built in a flood-risk area — a share Verisk’s models project could rise to one in seven new houses by 2050.
Together, these trends increase insured catastrophe losses independently of weather patterns and help explain why the industry's risk benchmark continues to rise.
What would that mean in practice? Verisk's models show that adding a significant U.S. landfalling hurricane to a year like 2025 could push annual insured catastrophe losses to roughly
Why a quiet hurricane season is not a quiet year
Verisk's report underscores that a year without a U.S. landfalling hurricane can lull the market towards thinner pricing and looser underwriting terms, precisely when discipline matters most. Down years, the report notes, are when catastrophe models help insurers separate resilience from volatility when the market eventually turns.
“The
A persistent global protection gap
The report also quantifies a persistent and uneven protection gap. Globally, only about 38 percent of economic losses from natural catastrophes are insured, corresponding to a modelled economic AAL of more than
“Narrowing the protection gap requires broader access to insurance and a clear understanding of the risk,” Newbold said. “By expanding model coverage and making both Verisk and third-party models available through our platforms, we are helping insurers evaluate risk in more markets and identify opportunities to extend coverage to communities that remain underinsured.”
About the report
The 2026 Global Modelled Catastrophe Losses Report is produced using the same suite of catastrophe models and software that Verisk's insurance and reinsurance clients rely on every day, covering more than 120 countries and regions, so its figures can be reproduced and tested in clients' own environments. The full report is available here.
Verisk’s catastrophe models are developed by AIR Worldwide Corporation, a wholly owned subsidiary of Verisk Analytics, Inc.
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About Verisk
Verisk (Nasdaq: VRSK) is a leading strategic data analytics and technology partner to the global insurance industry. It empowers clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, sustainability and political issues. Through advanced data analytics, software, scientific research and deep industry knowledge, Verisk helps build global resilience for individuals, communities and businesses. With teams across more than 20 countries, Verisk consistently earns certification by Great Place to Work. For more, visit Verisk.com and the Verisk Newsroom.
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Mary Keller 339-832-7048 mary.keller@verisk.com