Extreme weather caused $288 billion in disaster losses in 2025: Reinsurer Munich Re

SINGAPORE – A planet “fevered by climate change” is fuelling increasingly costly and deadly weather, with

twin cyclones in Asia

that killed nearly 2,000 people among the worst natural disasters in 2025, global reinsurer Munich Re said on Jan 13.

The Asia-Pacific region bore the brunt of the deadly disasters in 2025, accounting for 13,600 of 17,200 deaths worldwide.

Natural disasters including wildfires,

floods and severe storms

caused US$224 billion (S$288 billion) in overall losses worldwide in 2025.

Weather disasters made up 92 per cent of all 2025 losses worldwide and 97 per cent of insured losses, Munich Re said. Rising temperatures in the atmosphere and oceans are intensifying storms and rainfall, with the burning of fossil fuels identified as the main driver of climate change.

“Climate change has already amplified many extreme weather events in 2025 and this will go on,” said Munich Re’s chief climate scientist Tobias Grimm.

“Our planet has a fever, and more heat produces more destructive weather,” he told The Straits Times.

Globally, the past 12 months are expected to be

the third-hottest on record after 2024 and 2023.

Insured losses from such disasters totalled US$108 billion globally in 2025, Munich Re said in its annual natural catastrophe report, marking another year with insured losses of more than US$100 billion.

The two deadliest disasters were the

March earthquake that struck Myanmar and Thailand

, killing 4,500 people, and

a series of earthquakes in Afghanistan

in August and September that claimed about 3,000 lives.

Weather-related disasters are increasingly causing the most destruction, reflecting the growing challenge insurers face from climate-driven disasters.

A key takeaway for 2025 is that it was the most expensive “non-peak peril” year on record, Mr Grimm said. In the insurance industry, non-peak or secondary perils refer to floods, severe thunderstorms, hailstorms and wildfires. Peak perils include hurricanes and earthquakes.

“What we have once called secondary risks are now becoming the primary loss driver,” he said.

He described 2025 as an unusual year. It was also another extremely costly year, after 2024’s total disaster losses hit US$368 billion (adjusted for inflation), of which US$147 billion was insured.

Lucky escapes, record losses

“2025 was a year with two faces. The first half had the highest insured losses ever for any first half-year, followed by the quietest second half-year in a decade,” said Mr Grimm.

“Many regions were simply lucky,” he said, noting that for the first time in a decade, no hurricanes made landfall in the United States. “So this is a warning, not a relief at the end, and preparation and prevention remain really critical to cope with increasing climate risks.”

And that warning is reflected in the string of events in 2025 that caught many communities off guard.

The US suffered the single costliest event that year, when fires in Los Angeles killed 30 people and caused overall losses of about US$53 billion, including insured losses of about US$40 billion. The fires, whipped up by hot, dry weather and extreme winds, ripped through some of the city’s wealthiest neighbourhoods.

In the Caribbean, Hurricane Melissa, a maximum Category 5 storm and one of the most powerful storms ever recorded in the Atlantic,

caused widespread destruction to Jamaica

in late October. Scores of people were killed, with total losses at about US$9.8 billion, of which about US$3 billion was insured.

Globally, tropical cyclones in 2025 caused around US$37 billion in losses, of which about US$6 billion was insured, Munich Re said in the report.

In Asia-Pacific, natural disasters caused losses of about US$73 billion, above the 10-year average of US$66 billion. Only US$9 billion was insured.

The costliest event in the region was the Myanmar earthquake. Overall losses totalled about US$12 billion, of which US$1.5 billion was insured, Munich Re said.

Flooding in north-eastern China led to losses of US$5.8 billion, with less than US$500 million insured.

Urgent need to adapt

The very low level of insurance coverage across large parts of the Asia-Pacific is a persistent challenge outside wealthier nations and major cities in the region. The scale of disasters is also driven by more extreme weather, growing populations and a lack of preparedness.

“Many regions are lacking the preparation, the adaptation,” Mr Grimm said. “Sound adaptation and prevention measures, such as helping communities prepare and having publicly available natural hazard zoning systems, should be more widely deployed,” he said.

Mr Grimm noted that some countries, including Singapore and China, have bolstered their defences, especially against flooding, but more could be done elsewhere.

For South-east Asia, severe flooding in 2025 was by far the region’s costliest and deadliest natural disaster. In late November,

Cyclone Ditwah triggered extreme flooding and landslides in Sri Lanka,

killing about 650 people and causing total losses of around US$4 billion, of which less than US$500 million was insured.

At around the same time, Cyclone Senyar formed at the top of the Strait of Malacca – an extremely rare storm for a location so close to the equator. It dumped huge amounts of rain on the northern parts of Sumatra and then peninsular Malaysia,

destroying scores of villages and leaving many people homeless.

Bridging protection gap

“In Indonesia and Malaysia, we saw US$2.9 billion overall losses from Cyclone Senyar, and nearly nothing of that was insured,” Mr Grimm said.

This underscores what is called the insurance protection gap in the region, which is the difference between total economic losses from risks like natural disasters and the amount covered by insurance.

He said the protection gap in South-east Asia in 2025 was 92 per cent, meaning only 8 per cent of losses were insured, compared with the long-term average of 88 per cent, or 12 per cent covered by insurance.

Bridging the gap is a major challenge for governments, companies and consumers in the region, as it leaves many people without a vital safety net, insurers say.

The South-east Asia Disaster Risk Insurance Facility is a regional insurance platform helping Asean countries reduce disaster risk. Among its efforts is parametric insurance – quick, data-driven payouts triggered by predefined indices such as temperature and wind speed – rather than traditional loss adjustment. Within days, people affected by a typhoon, heatwave or flood can get small cash payments.

Parametric insurance has gained a lot of traction, particularly for small- and medium-sized enterprises, the tourism industry and vulnerable small island nations, Mr Grimm said.

But much more needs to be done to close the protection gap, including stronger outreach to vulnerable communities and better access to data so that people can understand the risks to their homes and communities, he added.