Insurers just marked the costliest first half of the year since 2011

Global insured losses totaled $84 billion in H1 2025, the highest first-half figure since 2011, according to Gallagher Re. This significant increase is predominantly driven by over $30 billion in U.S. severe convective storms, accounting for 39% of global losses, and an estimated $40 billion from historic Southern California wildfires. Gallagher Re projects full-year losses will surpass $100 billion, signaling a 'new market reality' for insurers due to increasing storm frequency, damaging hail events, and elevated repair costs fueled by soaring housing prices.

Analysis

Global insured losses for the first half of 2025 have reached $84 billion, the highest first-half total since 2011, signaling significant pressure on the insurance and reinsurance sectors. According to the report from Gallagher Re, the reinsurance division of Arthur J. Gallagher & Co. (AJG), this surge is dominated by two primary drivers: an estimated $40 billion from the costliest wildfire events ever recorded in Southern California and over $30 billion from severe convective storms in the U.S. The intensity of these weather events is notable, with 11 individual U.S. storms each causing over $1 billion in insured losses. Gallagher Re projects that full-year losses are on a clear path to exceed $100 billion, terming this elevated level a 'new market reality.' This trend is exacerbated by underlying economic factors, including soaring housing, material, and labor costs, which are inflating the value of claims and amplifying the financial impact of each event for insurers.

Key Decisions for Investors

• Investors should critically review exposure to property and casualty insurers and reinsurers, as the record H1 losses and projection of a '$100 billion new market reality' signal significant, sustained pressure on underwriting profitability.
• Focus on insurers' ability to implement substantial premium increases during upcoming renewals, as pricing power is the primary defense against rising catastrophe frequency and inflationary pressures on claims costs.
• Differentiate between underwriters, who bear the direct financial losses, and insurance brokers like Arthur J. Gallagher & Co. (AJG), which may benefit from a hard market characterized by rising premiums and increased demand for risk placement services.