Natural catastrophes (Nat CAT) resulted in over $100bn in insured losses in 2025, marking the sixth consecutive year such losses topped that threshold. This is according to the "Natural Catastrophe Review 2026" report by global brokering and financial solutions firm WTW. The report noted that 2025 could be described as a 'moderate' loss year because losses were nearly $40bn lower than in 2024.
Key observations from the Review include:
- Risk modelling has to consider compound perils
Cumulative damage brought on by multiple perils in quick succession (such as earthquakes on rain-saturated soil, or typhoons following seismic events) can often lead to delayed claims payments and disagreements with policyholders.
In Southeast Asia, this phenomenon is increasingly evident. Events such as earthquakes occurring on rain-soaked ground or typhoons following seismic activity can escalate losses, often complicating claims processes and creating friction between insurers and policyholders. These evolving risk patterns highlight the need for disaster risk financing solutions that apply a risk-layered approach to help governments, businesses and insurers manage and mitigate the escalating financial impacts of consecutive catastrophic events.
The Philippines provides a clear example of this escalating challenge. In the latter half of 2025, the country endured Super Typhoon Ragasa, four major earthquakes and their aftershocks, followed by two additional landfalling typhoons, each compounding the damage left behind by earlier events. Such complex, multi-hazard sequences not only strain emergency response capabilities but also increase the likelihood of delayed claims payments and operational disputes.
Dr Christopher Au, Head of the APAC Climate Risk Centre at Willis, said, “What makes the Philippines particularly vulnerable is not only the increasing frequency of multi-hazard events, but also the persistent catastrophe protection gap. Insurance penetration remains low at currently less than 1%, leaving businesses and communities at risk.
- Flood risk is also no longer confined to formally defined zones, and more intense rainfall than ever before is expected to accompany tropical storms
As the world continues to warm, both ends of the hydrological spectrum (flood and drought) are expected to become more intense. The second half of 2025 featured extreme or record-setting rainfall in many locations, leading to numerous cases of severe flooding in places not typically considered to be high risk.
Pluvial flooding, which occurs when intense rainfall overwhelms surface drainage and causes high water in places far removed from rivers, lakes or coasts, has become a risk to watch.
Dr Au added, "Early indication suggests that the flooding across the Southeast Asia region may result in economic losses well above $10bn, compared with the $1bn-to-$2bn range typical of major regional flood events over the past decade. Warmer oceans, shifting formation zones and greater track sensitivity mean that past patterns are becoming less reliable guides to future risk. With this changing operating environment, the role of counterfactuals is becoming more central to risk management strategies to help understand possible impact from near misses and natural variability, and not just rely on past observations.”