Willis Releases Review Focused on Felines: Cat Risk Analysis
In the latest Willis Natural Catastrophe Review, experts have forecasted that insured losses from natural catastrophes will exceed $100 billion for the seventh consecutive year in 2025. This prediction follows a series of costly events, including the January 2025 wildfires in Los Angeles, which have already caused estimated insured losses of $40 billion, making it the costliest wildfire event in history.
The Los Angeles wildfires are not the only significant event predicted for 2025. Major wildfires in Japan and South Korea, record-breaking tornado activity in the US, and unprecedented weather events in Australia and Ireland are further straining insurance markets. Additionally, an above-average number of storms is forecast for the North Atlantic hurricane season, which could make 2025 one of the costliest years for insurers.
Looking beyond 2025, the general trend suggests that natural catastrophes will continue to pose significant risks due to climate change. The Willis Review emphasizes the need for risk managers to adapt strategies and build resilience in the face of these evolving threats.
The ongoing pattern of high-loss years underscores the impact of climate change, necessitating a shift towards adapting and building resilience against climate extremes. There is a renewed focus on how risk is modeled, particularly for wildfires in high-exposure areas like the urban-wildland interface.
The Willis Report also looks at the growth in renewable energy projects, suggesting opportunities for insurers in this sector. However, global efforts to keep the temperature below 2°C above pre-industrial levels are likely failing, and the focus must now turn to adapting and building resilience in the face of this new reality.
Data-driven strategies are needed to narrow protection gaps and to stay resilient in a rapidly changing world. The severity and scale of recent catastrophes underline the need to confront a new era of climate extremes. Risk managers must reassess the risk, integrate climate forecasts into their plans, and ensure insurance and risk frameworks are optimized for today's evolving threats.
In conclusion, the Willis Natural Catastrophe Review provides an expert outlook for the rest of the year and into 2026, exploring potential threats from hurricanes, drought, flood, and other hazards. As the world continues to grapple with the effects of climate change, it is crucial for risk managers, insurers, and policymakers to work together to build a more resilient future.
Reinsurers will need to account for the increased risk posed by a series of significant events in 2025, such as wildfires in Los Angeles, Japan, and South Korea, record-breaking tornado activity in the US, and unprecedented weather events in Australia and Ireland.
To stay resilient in the face of the anticipated high-loss years ahead, it is essential for risk managers to reassess risk, integrate climate forecasts into their plans, and optimize insurance and risk frameworks for the evolving threats caused by climate change, including potential impacts on sports and other industries sensitive to weather conditions.
