Catastrophic natural events wreak havoc, setting new costs standards during the initial six months of 2025.
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A severe earthquake in Myanmar and devastating wildfires in the Greater Los Angeles area have contributed to a significant increase in insured losses from natural disasters in the first half of 2025. According to Munich Re's analysis, the total insured losses reached an impressive $80 billion, making it the second-highest first-half figure since records began in 1980.
The wildfires in the Los Angeles metropolitan area were the most costly natural disaster of the first half of 2025, with estimated total losses of $53 billion and approximately $40 billion insured. These fires occurred during California’s typically wetter winter season, indicating a troubling shift in seasonal wildfire patterns driven by climate change.
The earthquake in Myanmar, with a magnitude of 7.7, was the second-costliest catastrophe of the first half of 2025, with estimated total economic losses of about $12 billion. The epicenter of the earthquake was near the cities of Sagaing and Mandalay, each with over a million inhabitants.
Weather-related events accounted for 88% of the total losses and 98% of the insured losses in the first half of 2025. Earthquakes made up 12% of the total losses and 2% of the insured losses.
Thomas Blunck of Munich Re emphasised the importance of prevention, such as through more resilient building methods, to avoid damages as much as possible. He also suggested that catastrophes like those in Los Angeles have become more likely due to global warming.
Climate change has contributed to increased frequency and severity of natural disasters, especially wildfires, leading to higher costs worldwide. The rise in losses is partly attributed to more people living and building in hazard-prone areas, combined with climate change creating more severe, unpredictable weather events. Insured losses have been growing at a long-term trend of 5–7% annually in real terms, and 2025’s first half losses nearly doubled the previous decade’s average.
The overall global losses from natural disasters were about $131 billion in early 2025, slightly less than 2024 but still above long-term averages, showing persistent high disaster costs. The wildfires in Los Angeles accounted for a significant portion of the total insured losses in the first half of 2025.
The analysis of the losses was conducted by Munich Re and was published on Tuesday. Thomas Blunck of Munich Re stated that climate change is a fact and is changing life on Earth. He also emphasised the need to address the issue urgently to prevent future catastrophes.
In conclusion, the data from Munich Re's 2025 H1 analysis highlights the growing impact of climate change on natural disasters worldwide. The increasing frequency and severity of extreme weather conditions, such as unseasonal and severe wildfires, are driving up the financial impact of natural disasters. It is crucial to take action to address climate change and build more resilient infrastructure to prevent future disasters and their devastating consequences.
- In light of the increasing financial impact of natural disasters, such as the unseasonal wildfires in the Los Angeles area, there is a pressing need to consider environmental-science approaches as part of the financial industry's strategies.
- Faced with the escalating costs of natural disasters driven by climate change, as demonstrated by the $80 billion in insured losses in the first half of 2025, science-based solutions in climate-change mitigation are indispensable for minimizing future financial losses.
