FT: Natural disasters to cost global economy $450 billion annually

Natural disasters are expected to cause around $450 billion in economic losses worldwide each year on average, while insurance will cover less than half of those losses, the Financial Times reports, citing a study by risk modelling company Verisk.

The report said Verisk estimates that 62% of the losses, or around $279 billion, will remain uninsured. These costs will be borne by homeowners, businesses and governments.

Researchers attribute the rising cost of damage to climate change and urban expansion, as more properties are being built in areas vulnerable to natural disasters. Construction costs are rising, the newspaper noted.

In the United States, for example, residential construction costs are increasing faster than overall inflation. Against this backdrop, insurers are reducing the risks they are willing to cover. US insurance companies are tightening policy terms, excluding certain types of damage from standard coverage and refusing to renew policies for properties in the most vulnerable areas.

Developing countries face a different problem, with many homes and businesses having little or no insurance coverage to begin with.

As a result, the share of losses covered by insurers is declining, even as the industry continues to face substantial losses. In 2025, insured losses from natural disasters worldwide exceeded $100 billion for the sixth consecutive year.

By Bakhtiyar Abbasov