If you work in insurance, you know the feeling. It’s that sense of holding your breath as the calendar flips to a new year. We brace ourselves for the headlines, waiting for the first big storm, the first major earthquake, the first catastrophic event that will define the year.
But for the first three months of 2026, the industry got something it rarely gets: a bit of a break.
The latest numbers are in, and it looks like the global insurance and reinsurance world can let out a collective, albeit cautious, sigh of relief. According to a new report from Gallagher Re, the first quarter was unusually quiet on the catastrophe front. This leaves insurers with healthy budgets as we head into the second and third quarters, which, as we all know, are historically when things really start to heat up.
Let's dig into what happened, why it matters, and what we should be watching for next.
The Big Picture: A Calm Start to the Year
So, just how calm was it? For starters, we didn't see a single insured loss event top the $10 billion mark. In this day and age, that’s pretty remarkable.
Total economic losses from natural disasters hit about $58 billion. Now, that’s still a massive number, but it’s actually 12% below the 10-year average for the first quarter. The main reasons for this dip were a later-than-usual start to the U.S. severe storm season and the simple absence of those mega-disasters that can wipe out a year's worth of profit in a few days.
To put it in perspective, this is the fourth quarter in a row where insured losses have stayed below $40 billion. We haven’t seen a streak like that since early 2019. It feels like we’ve been given a little room to breathe before the main event—hurricane season—kicks off.
The Curious Case of Europe’s Windstorms
Now, here’s where the story gets really interesting. While the global insured loss numbers were down, Europe was getting hammered by windstorms.
A series of cyclones from late January through February made it the costliest start to the year for European windstorms since 1999. The economic damage? A staggering $22 billion.
But here’s the twist: the insured losses were only about $3.5 billion.
What does that tell you? It screams "protection gap." More than 80% of the financial damage from these storms was uninsured. This was especially true in parts of Portugal and Spain, where flood insurance just isn't as common.
Think about Storm Kristin in Portugal. It became the country's costliest insured windstorm on record, causing over $6 billion in economic damage. It’s estimated that half to 70% of homes in one district alone suffered some kind of damage. Yet, a huge chunk of that financial pain falls directly on homeowners and governments, not insurers.
This situation has even led some experts at Gallagher Re to ask a pretty pointed question: should European windstorm even be considered a "peak" peril anymore? The last time one of these storms caused more than $10 billion in insured losses was way back in 2007. Since then, we’ve seen massive losses from hurricanes, wildfires, earthquakes, and floods, but European wind has been a different story. It’s a fascinating debate.
It's Not Just the Weather, It's Us: The Real Driver of U.S. Storm Costs
Let’s head back across the pond to the U.S. While the first quarter was quieter for severe convective storms (SCS)—think tornadoes, hail, and high winds—with about $7 billion in insured losses, the long-term trend is what really caught my eye.
The report dug into why SCS losses have been skyrocketing over the past 25 years, and the answer is probably not what you think. It’s not just that the storms are getting worse. In fact, an incredible 80% to 90% of the increase in insured losses comes from factors that have nothing to do with the weather itself.
So, what’s really driving the costs? It’s us. It’s how and where we build.
The report points to a few key culprits:
- The Cost of Everything: The turning point was around 2008. Rising energy prices led to a permanent jump in the cost of asphalt and other construction materials. When a hailstorm rips through a neighborhood, replacing all those roofs costs way more than it used to.
- Building in Harm's Way: We’ve seen explosive population growth in states that are prime targets for these storms. Since 2000, we've added over 14 million new homes in the top 20 states for SCS losses. More homes in the path of a storm means more potential for damage.
- Our Favorite Roofs are Vulnerable: The vast majority of American homes have asphalt shingle roofs, which are particularly susceptible to hail damage. This single factor has a massive impact on claim frequency and severity.
And it doesn't stop there. New exposures are popping up all the time. Think about the boom in rooftop solar installations or the massive data centers being built right in the middle of "Tornado Alley." These are new, high-value targets that add another layer of risk and potential cost.
What's Next? A Look at the Horizon
So, a quiet Q1 is nice, but we all know the game isn’t over. What does the rest of 2026 have in store?
Well, all eyes are on El Niño. NOAA is giving it at least a 90% chance of being in effect during the peak of the Atlantic hurricane season. Typically, El Niño means less hurricane activity in the Atlantic (good news!) but an increase in storms in the Pacific basin. It’s a trade-off. We also know there’s a 98% chance that 2026 will end up as one of the top five warmest years on record, and a warmer world is a more volatile world.
For the reinsurance market—the insurers for insurers—this quiet start means things are stable for now. Reinsurance prices actually came down a bit during the April 1 renewals.
The report estimates it would take a truly massive event, or a series of them, causing something like $115 to $125 billion in losses above the expected average, to really shake up the market and drive prices up again.
So, for now, we can take that breath. The industry has its cat budget intact and is on solid footing. But as anyone in this business knows, you always have to keep one eye on the radar, because the next big one is always just a matter of when, not if.
