Progressive Edges Out State Farm to Claim Lead in US Total Auto DPW  June 24th 2025

Too Hot to Insure | Insurance Thought Leadership

In January 2025, fires in Los Angeles killed at least 29 people and destroyed over 18,000 homes and buildings, marking one of California's worst disasters.

Insurance offers one mechanism to support individuals who have suffered catastrophic losses, but insurance companies are now more cautious than ever when covering wildfires and other weather-related risks. Last year, insurers worldwide paid out more than $140 billion in claims relating to natural catastrophes, the fifth consecutive year with losses exceeding $100 billion.

Major natural disasters that cause substantial insurance claims, including storms, wildfire and flooding, are anticipated to become more severe with climate change.

But even for those perils for which recent spikes in payouts have been down to factors such as economic inflation and population growth, climate change still provides an unwelcome boost to risk and, therefore, premiums.

Typically, insurers used past claims to predict future losses from the same perils. So long as there had been no major unexpected disasters or big shifts in risk or exposure in a specific area, insurers could be confident that the premiums paid by the many would be enough to finance the claims of the few.MORE

Hurricane Katrina: a watershed event for insurance | Swiss Re

In 2005, Hurricane Katrina struck the Gulf Coast of the United States, causing catastrophic damage in Louisiana and Mississippi. Powerful storm surge breached flood defences across New Orleans, creating major flooding. Insured losses from the event surpassed USD 100 billion in 2024 prices.

Twenty years later, we evaluate the factors that would influence a similar loss occurring today. Some aspects are positive: significant improvements in flood defences and more resilient building design are likely to lessen the impact. Yet, significant concerns persist, particularly the community impact, as New Orleans’ population and economy have only partially recovered.

Katrina caused total economic losses of over USD 225 billion in 2024 prices. Total insured losses came to USD 105 billion at 2024 prices and makes Katrina the most expensive natural catastrophe event for the global insurance industry ever, across all perils and regions.

How would New Orleans and the insurance industry cope today with a repeat of an event like Katrina? Taking all variables into account, and using Swiss Re’s in-house models and industry exposure database, we simulate that the insured losses from the occurrence of Katrina today would be close to USD 100 billion in 2024 prices – slightly lower than the inflation-adjusted loss of 2005.