In its Q3 2025 Natural Catastrophe and Climate Report, reinsurance broker Gallagher Re has suggested that despite the manageable nature of catastrophe activity seen this year so far, the industry should continue to expect annual volatility in losses in the future.As per the broker’s report, global nat cat activity remained “relatively mild” during the third quarter of 2025, with the abnormally low frequency of high-cost events resulting in a year well within annual catastrophe budgets for governments and the insurance industry.The firm specifically highlighted how the quieter-than-expected tropical cyclone activity in the Atlantic and Pacific Oceans has resulted in Q3 insured loss totals estimating around USD $15 billion, the lowest total seen since 2016.Concurrently, while the preliminary total global insured loss for the first nine months of 2025 was estimated at $105 billion, 8% lower than the decadal average ($114 billion) it still marks the sixth consecutive calendar year with losses exceeding $100 billion, and the eighth year since 2017.

In addition, the reinsurance broker also said that preliminary total economic losses for Q1-Q3 2025 reached $214 billion, which is below the 2015–2024 decadal average of $338 billion, with most losses occurring in the first half of the year.Q3 2025 currently accounts for less than $50 billion, which heavily indicates a relatively subdued quarter for global nat cat activity.Gallagher Re outlined that the impacts from the Palisades Fire and Eaton Fire in California remain the costliest sequence so far this year ($65 billion in economic loss, $40 billion in insured loss).

“The US has now also registered 18 additional billion-dollar events, and all but one were SCS-related.The Q1-Q3 total for US SCS was minimally estimated at USD61 billion but is expected to rise further as loss development proceeds,” Gallagher Re explained.“Outside of the SCS and wildfire perils, which remain the only two perils which have seen YTD economic loss activity above their recent decadal averages, global natural catastrophe losses have been reasonably manageable.

Q3 saw notable seasonal monsoon flood activity in parts of Asia (China, Japan, Pakistan, India).Those events drove a large portion of the globe’s USD28 billion flood total YTD,” the broker continued.As per the firm’s report, there were at least 17 billion-dollar events outside of the US.

The largest non-US event was the catastrophic earthquake in Southeast Asia, which had its epicenter in Myanmar and spread well into parts of Thailand, causing an estimated $15 billion in economic damage.Gallagher Re’s report also explained that global temperatures continued to set monthly modern era records in 2025, with global surface land and ocean temperatures during Q1-Q3 2025 slated as being the second warmest on record.As well as this, the broker also warned that the rising risk of heat-related stress poses a challenge for re/insurers, given that many of its impacts are not currently captured by traditional catastrophe models.

The firm’s report explained that risks such as energy grid failures, AI data centre vulnerabilities, soil subsidence, and the broader impacts of extreme heat remain largely ‘unmodeled’ by the major vendors.“Given this reality, re/insurers must continue to embrace outside-the-box innovation by either investing in advanced analytics or developing tailored risk assessment frameworks that can help underwriters remove potential blind spots,” Gallagher Re said.Steve Bowen, Chief Science Officer at Gallagher Re, commented: “2025 has continued to be a ‘top heavy’ year with the Top 5 costliest events (the two major January wildfires in the Los Angeles area and three US SCS outbreaks) accounting for 54% of all global insured losses alone.

If the last three months of 2025 stay manageable and on par with recent historical loss performance in Q4, this will likely be a further boost to the (re)insurance industry’s financial buffers.” Despite the manageable nature of the cat year so far, Bowen said that the industry should continue to expect annual volatility in natural catastrophe losses in the future.“We should continue to expect that low frequency/probability events may become a bit more likely as the ‘tail’ shifts.The change in hazard behavior / frequency, in combination with other socioeconomic/macroeconomic factors, will ultimately drive greater loss potential,” Bowen added.

Concluding: “You can see that when comparing the most recent historical 5-year (2020-2024) average annual loss (AAL) of USD155 billion to the 10-year AAL (2015-2024) of USD135 billion.Building financial underwriting protections against loss volatility is critical.”.All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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