As wildfires ravage Los Angeles at the start of 2025, new data reveals that insured losses from natural catastrophes reached a staggering $140 billion in 2024, more than double the 30-year average and the highest level since 2017, Bloomberg reports.
The figures, compiled by Munich Re, underscore the escalating impact of extreme weather events, increasingly driven by climate change.
The report, released on Thursday, identifies Hurricanes Milton and Helene, which battered the US, as the costliest disasters of 2024. However, the wildfires currently blazing across Los Angeles threaten to surpass those losses and become the most financially devastating in history. The fires around Santa Monica and Malibu, impacting areas with median home values exceeding $2 million, are projected to cause between $52 billion and $57 billion in damages and economic losses, according to AccuWeather Inc.
These events are examples of what the insurance industry terms “non-peak perils,” such as wildfires, floods, and severe thunderstorms. Scientists believe that these types of events are becoming more intense and frequent due to climate change, presenting challenges to the insurance industry as they are more difficult to offload to capital markets than “peak perils” like hurricanes.
The surge in natural disasters has coincided with record-breaking global temperatures. 2024 was the hottest year on record, with the European Union’s Copernicus Climate Change Service reporting a global average of 1.62°C above pre-industrial levels in November, exceeding the critical 1.5°C threshold.
Grimm emphasized that “science has become more certain that climate change plays a crucial role in making weather disasters more frequent and more extreme.” The changing climate is disrupting long-held weather norms, as seen with extreme flooding in unexpected locations like Dubai and Valencia, Spain, resulting in billions of dollars in insurance losses.
The report notes that higher temperatures are leading to more intense rainfall and a faster intensification of tropical cyclones. Hurricane Milton, which struck Florida in October, caused $25 billion in insured losses. Hurricane Helene resulted in $16 billion in losses just weeks prior.
Overall, damages from natural disasters reached $320 billion in 2024, the highest since 2021. Weather catastrophes were responsible for 93% of the overall losses and 97% of insured losses. Approximately 11,000 lives were lost as a result of these natural disasters, according to the Munich Re report.
In response to the escalating risks, some insurers are retreating from high-risk areas. However, Grimm states that “every risk can be insured ‘if you get the right premiums,'” and that Munich Re does not “generally exclude any regions from insurance because of climate change.”
