WTW: Nat cat protection gap at 60% as climate rise reaches 1.5°C

The insurance protection gap for natural catastrophes stands at 60%, according to WTW’s Natural Catastrophe Review.

2024 was the first year to exceed 1.5°C warming, the broker emphasised, seen as a critical point in global warming linked with extreme weather nat cat events.

Natural disasters continue to put a strain on global insurance markets, WTW warned.

Global insured losses surpassed $140bn in 2024, marking the fifth consecutive year insured damages exceeded $100bn.

Total economic damages surpassed $350bn, highlighting the inadequacy in resilience to climate-related risks.

Wildfires in Los Angeles “adding to the pressure”, have already driven insurance loss estimates in the region of $30-$40bn in the first few weeks of 2025, WTW said.

WTW’s Natural Catastrophe Review is a biannual publication on the physical, vulnerability and socioeconomic factors that contributed to the biggest nat cats.

“Our long-standing collaboration with scientists gives us better insights into growing exposure to perils, especially perils that are changing rapidly,” said Hélène Galy, head of WTW’s research network.

“It’s easy to be lured by the increased sophistication of risk models: a deeper understanding of data and science are critical to identify real improvements and remaining limitations of risk models, to make them more useful to decision-makers,” Galy added.

The report emphasised a number of “unprecedented natural catastrophes” in the past year.

These included Spain’s costliest natural catastrophe: The Valencia floods causing €3.7bn in claims.

the highest insurance claims on record for natural catastrophes in Canada also cost $5.6bn.

Hurricanes Helene and Milton, which made landfall in Florida for a combined $45bn hit, and the deadliest Western Pacific typhoon season since 2013.

That these were largely “climate-driven risks” was also underlined by WTW, coinciding with the first year on record to exceed 1.5°C above pre-industrial levels, “a significant milestone”.

The mounting financial impact of natural catastrophes continues to be driven by the expansion in both the number and value of assets at risk.

“However, climate change is also playing an increasingly prominent role, with several events in 2024 being linked to human-caused warming, including hurricanes Helene and Milton, the South American drought, and Storm Boris, which impacted Europe,” WTW said.

The broker also made a “call to action on resilience”:

The review emphasised the need for enhanced risk modelling, innovative insurance solutions and proactive adaptation and the need for mitigating measures to address the growing impacts of climate change on economies and societies.

“Credible data and risk models can help you make informed choices about trade-offs: making investments to become more resilient, buying more insurance protection, or accepting the risk. Beware of becoming overly committed to one approach,” said Peter Carter, head of WTW’s climate practice.

“Simply having lots of data or a single modelling approach may not give the robust risk perspectives you need,” Carter continued.

“Seeking expert input and a more nuanced modelling approach, where you challenge your core modelling approach (“defender”) with a different approach (“challenger”) will provide alternative perspectives. Then you will navigate an increasingly volatile natural hazard environment much more effectively,” he added.