Global severe storm losses remain elevated, highlighting importance of forward‑looking climate risk assessment for Australian organisations

SYDNEY, 4 March 2026 - Aon plc (NYSE: AON), a leading global professional services firm, has released its 2026 Climate and Catastrophe Insight report, highlighting potential insurance affordability pressures for Australian organisations as insured catastrophe losses in Australia totalled an estimated US$2.9 billion in 2025.

The report shows that insured losses can fluctuate significantly from year to year as longer-term climate trends, continued asset growth and pressure on global insurer balance sheets continue to reshape risk outcomes to varying degrees.

Within this total, Ex‑Cyclone Alfred, which made landfall in southeast Queensland in March 2025, was the largest insured loss event of the year, generating an estimated US$1 billion in claims.

“Year-to-year catastrophe losses can be highly volatile,” said Dr. Tom Mortlock, head of climate analytics, Asia Pacific for Aon. “Multiple studies suggest that urbanisation in increasingly hazardous areas is a significant underlying driver of the multi-decadal loss trend. That continued exposure growth, combined with broader cost pressures, helps explain why insurance affordability remains a key issue.”

Global Losses Reinforce the Pressure on Insurance Systems

Globally, insured losses reached US$127 billion in 2025, marking the ninth consecutive year of above-average insured losses. Economic losses from natural disasters reached US$260 billion, the lowest level since 2015.

The report highlights how frequent, high-volume events continue to reshape global loss patterns and underscores the importance of both physical and financial resilience in helping organisations manage volatility and support long-term insurability.

The report also notes the growing importance of alternative risk transfer solutions, including parametric insurance, alongside stronger infrastructure, better forecasting and resilient building standards to reduce long-term damage and assist communities and businesses to recover faster.

Insurance Affordability and Penetration Concerns

In many regions, particularly emerging markets, more than half of economic losses are estimated to have remained uninsured, leaving millions exposed to financial risk. This is especially acute in Asia, where more than 90 percent of assets are estimated to remain uninsured against climate and catastrophe events. This ongoing protection gap continues to influence recovery outcomes and long-term access to insurance.

For Australia, where insurance penetration is higher than in much of the Asia Pacific region, these hazard trends raise important considerations around resilience, affordability and the sustainability of insurance coverage.

“Insurance affordability and access remain important issues in Australia,” Mortlock said. “Even in a softer market, where risk is not well differentiated, communities and businesses can still face a widening gap between economic losses and what is actually insured due to a combination of both climate and non-climate factors.”

Key Findings from the 2026 Global Report

• Severe convective storms (SCS) have overtaken tropical cyclones as the costliest insured peril of the 21st century, driven by high-frequency and high-severity outbreaks in the U.S. In 2025 alone, SCS generated US$61 billion in insured losses globally.
• Insurers covered nearly half of global economic losses in 2025, leaving a protection gap of 51 percent, the lowest level on record.
• Forty-nine billion-dollar economic-loss events occurred in 2025, underscoring the cumulative impact of increasingly frequent, medium-sized catastrophes.
• Wildfires in California caused US$58 billion in economic losses and US$41 billion in insured losses, the most expensive wildfires ever recorded globally.
• Global fatalities totalled 42,000, driven primarily by earthquakes and heatwaves, 45 percent below the 21^st-century average. The Myanmar earthquake was the deadliest event apart from heatwaves, claiming 5,456 lives.
• Extreme heat caused more than 25,000 deaths globally and remained a major driver of natural disaster-related mortality, with 2025 ranking as the third-hottest year on record.

A Forward-Looking Shift to Climate Risk Decision-Making

A key development in the 2026 report is the integration, for the first time, of forward-looking climate projections from Aon’s physical climate risk modelling tool, Climate Risk Monitor.

“This marks an important shift from retrospective analysis of historical losses to a forward-looking assessment of where risk is emerging and intensifying,” Mortlock said. “Improved climate and risk data supports earlier, more informed decision-making beyond reactive responses to loss events. Integrating climate risk into core strategy is critical for Australian organisations planning for long-term resilience. This is particularly important with the advent of mandatory climate reporting in Australia.”

The report reinforces that organisations able to quantify mitigation measures and demonstrate credible loss reduction to insurers and capital providers are better positioned to unlock more affordable and sustainable insurance coverage.

For further details, see the full 2026 Climate and Catastrophe Insight report.

About Aon

Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.

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