$117 billion: the insured average annual loss (AAL) estimated for natural catastrophe events in the United States, according to Verisk's 2026 Global Modeled Catastrophe Losses Report. This figure represents roughly two-thirds of the $171 billion global AAL benchmark. The AAL is not a forecast for next year; it is the level of loss the insurance industry should be prepared to absorb over the long term. North America remains the dominant contributor, accounting for $124 billion of the global total.
A benchmark built for today's risk environment
Global insured losses have topped $100 billion for each of the past six years. Since the report's first edition in 2012, estimated global modeled insured average annual losses have increased from $59 billion (in 2011 USD) to $171 billion (in 2025 USD). The increase reflects several factors, including exposure growth, expanded model coverage, advances in catastrophe science, and continuing refinement of the industry's view of risk. The 2026 AAL benchmark also reflects the latest generation of model updates, so it captures current science rather than relying on the assumptions of the last decade.
Why the average is only part of the story
The insured AAL is a long-run expectation, not a prediction. Especially in the U.S., frequent perils such as severe thunderstorms, wildfires, inland floods, and winter storms drive the average, while severe perils, including hurricanes and earthquakes, drive the extremes. Losses in any single year can land far from the mean, which is why the full range of modeled outcomes matters more than any one number.
The difference between average and extreme outcomes illustrates why insurers focus on more than the mean. Against the $171 billion global AAL, the same models estimate a 100-year industry loss approaching $477 billion and a 250-year loss exceeding $600 billion. Catastrophe models are designed to look beyond historical experience and quantify plausible events the industry has not yet experienced.
A single year of lower loss activity doesn't mean lower risk
Catastrophe losses were below average in 2025, but a below-average year reflects a favorable draw, not a change in the risk landscape. Despite the absence of a landfalling hurricane in the continental United States, global insured catastrophe losses still exceeded $100 billion. Wildfires and severe thunderstorms demonstrated how the accumulation of frequency-peril losses can generate significant industry losses even without a headline catastrophe event. The first half of 2026 further illustrated the point. The U.S. p&c industry's combined ratio improved to 92.7 from 96.5 a year earlier, and its estimated net underwriting gain nearly tripled to $31.7 billion. Those results show where the industry landed on the curve this year, not a shift in the underlying risk. The $117 billion expectation for the U.S. doesn't shrink because the first half of the year was kind.
A favorable year can improve financial results, but it does not alter the underlying distribution of catastrophe risk that insurers must manage.
Better to be prepared than surprised
For risk leaders, preparation starts with the AAL, the anchor for catastrophe risk appetite and capital planning and the number with the deepest data behind it. Catastrophe models rely on increasingly detailed exposure information, including building characteristics, reconstruction costs, and claims experience. The quality and currency of that data influence how insurers evaluate risk appetite, reinsurance needs, reserving assumptions, and capital allocation decisions. As exposures evolve and catastrophe science advances, maintaining an accurate view of risk becomes increasingly important.
Three considerations stand out in an environment where catastrophe losses regularly exceed historical expectations. First, evaluate risk appetite against the full range of modeled outcomes rather than recent loss experience alone; the tail of the distribution is often what places the greatest strain on balance sheets. Second, consider how reinsurance programs respond to the perils that drive extreme loss scenarios, not just the events dominating recent headlines. Third, reassess capital assumptions when exposure profiles or catastrophe models change materially, rather than relying solely on periodic review cycles. The purpose of catastrophe modeling is to look beyond what happened this year and quantify what could happen across thousands of plausible future scenarios. The industry's challenge is not preparing for the year it just experienced, but for the years it has not yet seen.
Sources
2026 Global Modeled Catastrophe Losses Report: https://www.verisk.com/resources/campaigns/modeling-insured-catastrophe-losses-a-global-perspective/
1H 2026 underwriting results: https://www.verisk.com/company/newsroom/
