Non-peak perils show steady rise amid shifting climate patterns: Munich Re’s Tobias Grimm

January 14 2026 by

While 2025 proved to be a year of contrasts – marked by an expensive first half and a benign second half – the most striking feature was the “steady increase” in losses from non-peak perils and the rise of unprecedented events with “climate change pressing on,” according to Tobias Grimm, chief climate scientist at Munich Re.

The year saw a notable escalation in non-peak perils, such as floods, severe thunderstorms, and wildfires – many of which reached new extremes – forcing (re)insurers to remain constantly vigilant.

“2025 was the year with the most expensive insured losses from non-peak perils on record. That’s something we need to be concerned about, because while hurricanes or earthquakes can follow a very volatile pathway – in some years we have big losses, and in others less so – there’s a pretty stable increase of non-peak peril losses over the years,” Grimm said.

“We had a year full of contrasts, not only due to the difference in developments between non-peak and peak perils, but also because the first half of the year was the costliest six months for the insurance industry globally [at US$92 billion], while the remaining half [at US$16 billion] was the quietest in a decade.”

There are also growing warning signs, with unusual events occurring in previously unaffected areas.

“For instance, in Switzerland, there was an ice rock avalanche that buried a complete village, which is a sign that alpine risks are increasing. In the Himalayan regions in Asia, glaciers are melting, so something is changing,” Grimm added.

“Climate change is pressing on.”

According to the National Oceanic and Atmospheric Administration, 2025 is almost certain to be either the second or third warmest year on record, confirming that 2024 retains the record for the warmest year.

Natural disasters caused lower overall and insured losses in 2025 – totalling US$224 billion and US$108 billion respectively – compared with US$368 billion and US$147 billion in 2024, according to Munich Re’s nat cat report.

However, non-peak peril losses, in particular, reached record highs of about US$166 billion in total losses, of which around US$98 billion were insured. Both figures exceed the inflation-adjusted averages for the past 10 and 30 years.

Unprecedented events

Looking ahead to 2026, Grimm expects non-peak perils to remain a persistent and increasingly serious risk.

“I was in South Korea last year discussing with the market the major wildfires that had just occurred in late spring. That was a major issue for that particular market, as it was a rather unprecedented event. And that’s also a signal that new types of events are emerging also in previously unaffected areas with a new order of magnitude,” he said.

“Even though 2025 wasn’t a record loss year on the whole, we need to stay alert and prepared. Preparedness and prevention are very important to cope with increasing climate risks.

“Societies need to prepare better for floods in particular, but also for big wildfire events like in California, and the increase in severe convective storms.”

Meanwhile, as the La Niña phase fades and conditions shift toward a mild El Niño, expectations for US hurricane activity may ease.

However, Grimm cautioned that forecasts for peak perils remain inherently uncertain and often lack robustness, as models can only estimate probabilities rather than provide precise predictions.

“We saw this just last year. There was a heightened expectation of increased hurricane activity, yet no hurricanes ultimately made landfall in the US,” he added.

“For insurers, that’s the constant challenge; relying on what’s visible in the rearview mirror doesn’t necessarily indicate what lies ahead. That’s why we have to continually refine and adjust our models to stay current.”

Bridging the gap

The Asia-Pacific region recorded overall losses of roughly US$73 billion in 2025, ranking second only to the Americas; however, the protection gap remains high at 92%, as insured losses accounted for just US$9 billion.

China, in particular, suffered major flooding and ranks as the second most affected country in terms of overall losses – behind the US – yet it placed sixth in insured losses, according to Grimm.

“Although the overall losses were slightly below the 30-year average, the protection gap we saw in China in 2025 is still huge, at 94%,” he said.

Grimm noted, however, that China is one of the few countries where weather-related losses relative to GDP and fatalities from flooding have declined over time, particularly since the devastating river floods of the 1990s.

“Numerous flood protection measures were implemented in China; loss prevention and resilience are topics that have been taken seriously in this country,” he said.

In contrast, in Southeast Asia – where insurance take-up remains limited and disaster preparedness often incomplete – losses in 2025 were driven largely by the earthquake in Myanmar and Thailand, as well as several typhoons and heavy rainfall events.

Cyclone Senyar in the Strait of Malacca, Typhoon Koto in the South China Sea, and Cyclone Ditwa in the northern Indian Ocean, which occurred concurrently, produced exceptional rainfall across the region.

According to Grimm, the three systems were interconnected.

“The underlying background mechanism was that the Indian Ocean Dipole, which is a natural climate variability, was in a negative phase last year, and that usually correlates with the La Niña in the Pacific Ocean, resulting in higher precipitation and a more active monsoon in Southeast Asia,” he said.

“We’re seeing this pattern across the globe: once events unfold, higher temperatures and increased heat tend to intensify impacts and lead to more destructive extreme weather.

“Every one degree of warming causes some 7% more moisture in the atmosphere, which is then released. When clouds form and rain begins to fall, this results in heavier precipitation.”

Notably, many cyclones tracked unusually far south last year, largely sparing Japan from typhoons while shifting impacts toward Southeast Asia. As a result, countries such as Thailand, Vietnam, Indonesia, the Philippines, and parts of China experienced more severe weather than usual.

Grimm stressed that it should not be viewed as a lasting climate pattern.

“Climate change significantly contributes to the increased risk and spread of bushfires by creating hotter, drier conditions.”

Tobias Grimm, Munich Re

“It happened due to specific climate conditions, but it’s not a systematic shift that would be expected to recur with a higher probability in the coming years,” he added.

Australia, meanwhile, also had a notably destructive year – the second-highest overall loss and fifth-highest insured loss on record – primarily driven by Cyclone Alfred and multiple severe thunderstorms and flooding events.

Grimm added that the protection gap in Australia was smaller, at 58% in 2025.

A high number of fatalities remains a serious concern in Asia, as four of the world’s five deadliest disasters last year occurred in the region.

These included two earthquakesntly higher in 2025 than the year before, even though they remained below the long-term average. Loss of life should always be the top priority when it comes to protection measures. Safeguarding people and their livelihoods must come before protecting property,” he added.

Australia is also facing a potentially costly start to the year, with insurers having received over 1,300 claims from the ongoing bushfires in the state of Victoria that have destroyed or damaged more than 500 structures.

The Insurance Council of Australia had declared the bushfires a “significant event” on Sunday, for the fires that have been raging since last week, mostly in Victoria, but also in New South Wales.

“Climate change significantly contributes to the increased risk and spread of bushfires by creating hotter, drier conditions,” Grimm added.

“This is what we call fire weather conditions. Rising temperatures and prolonged drought conditions dry out vegetation, making it highly flammable and susceptible to ignition, which allows fires to spread faster and farther.”

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