Curator: Alexandra Faciu
Montréal, Canada
This post is accessible to all readers.
Why we recommend it: Severe convective storms (”SCS”) now represent a structural threat to asset performance, insurance strategy, and capital allocation, and this report matters because it quantifies that shift with a level of precision practitioners have not previously had. SCS are no longer a marginal peril: they are producing losses larger than any other natural hazard except tropical cyclones and flooding, and they are doing so through frequent, correlated events that cut across regions and sectors. For governments and market participants, this means underwriting assumptions, reserve adequacy, valuation models, and resilience investment plans must adapt quickly. First Street’s analysis provides the empirical foundation needed to recalibrate those decisions.
Key takeaways:
- 2025 marked a structural break: SCS generated $82 billion in global economic losses, nearly one third of all natural catastrophe losses worldwide and more than any other single peril that year, and, more significantly, cumulative insured losses surpassed those from tropical cyclones for the first time, reaching roughly $794 billion. This made SCS the costliest insured peril of the century, a status driven not by rare catastrophic events but by frequent, geographically dispersed outbreaks across highly insured markets. Since 2000, inflation-adjusted SCS losses have grown at approximately 6.8% annually, more than double the rate for weather-related losses overall. If this trajectory continues, SCS is positioned to become the third costliest natural hazard globally within the next decade, behind only tropical cyclones and flooding.
- First Street’s modeling shows the scale of exposure embedded in the global economy. Nearly half of global GDP is already exposed to frequent hail, while almost two thirds faces frequent damaging winds. Annually, $17.8 trillion in GDP is exposed to damaging wind and $10.6 trillion to damaging hail, with wind exposure projected to rise to $20.2 trillion over the next 30 years. The modeling framework combines observed severe weather with atmospheric conditions from ERA5 (the European Centre for Medium-Range Weather Forecasts’ global atmospheric reanalysis dataset) reanalysis and uses machine learning to identify environments conducive to hail, tornadoes, and severe thunderstorm winds. Future risk is assessed using CMIP6 projections under SSP2‑4.5, with exposure measured by overlaying hazard outputs on gridded population and GDP. Severity thresholds align with known damage points: hail at one inch and above, and wind aligned to the Enhanced Fujita scale starting at 65 mph. N.B. CMIP6 is the sixth phase of the Coupled Model Intercomparison Project, a coordinated international effort in which climate modeling groups run standardized experiments to project future climate under common scenarios, while SSP2-4.5 is a middle of the road climate scenario combining moderate socioeconomic development with a radiative forcing of 4.5 watts per square meter by 2100, representing an intermediate emissions pathway.
- Case studies illustrate how these hazards translate into asset‑level consequences. Calgary International Airport’s 2024 hail event triggered a multi‑year capital project, with modeled roof replacement likelihood of 74%. The Midway Solar project in Texas saw nearly 400,000 modules damaged in 2019, with modeling showing two‑inch hail capable of damaging almost half the array. Storm Ciarán’s impact on an LPG facility in France produced significant business interruption, while in the US, the EF5 tornado that destroyed Mercy Hospital Joplin kept the asset offline for more than a year. Agricultural hail losses in Spain highlight how SCS affects both current inventory and future yield.
- Exposure patterns vary by region. At a 20-year return period, 52% of global GDP faces moderate hail, rising to 97% at 500 years. Wind exposure is even more extensive, with more than 62% of global GDP exposed to at least 65 mph winds at 20 years. APAC holds the largest absolute exposure, while the Americas show the highest relative economic exposure and currently face the largest SCS wind exposure, driven by the United States. EMEA has lower absolute exposure but the fastest projected growth at higher wind thresholds. Across all regions, wind exposure grows faster than hail, with APAC the fastest-growing wind region at more than 18% over the next 30 years.
- The report concludes that SCS must be treated as a primary peril. Their frequency, geographic breadth, and correlation potential mean that outbreaks can generate losses across diversified portfolios, affecting reserves, insurance procurement, resilience investment, loan structuring, and valuation.
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