Tornadoes, hail and damaging winds linked to climate change became the world's costliest insured natural disasters in 2025, overtaking hurricanes and other cyclones, according to a study published in July by climate risk modeling firm First Street.
The research found that severe convective storms generated more insured losses than any other natural disaster last year, according to the report.
Severe convective storms are short-duration but high-impact weather events that include tornadoes, hail and damaging wind. Unlike hurricanes, which typically generate losses from fewer large disasters, these storms produce recurring damage across broad areas through frequent outbreaks.
Global insurance payouts tied to severe convective storms have reached $794 billion over the past 25 years, exceeding combined insured losses from floods, earthquakes and droughts, based on Aon data cited by First Street. In 2025 alone, severe convective storms accounted for one-third of global natural disaster losses, with insured and uninsured damages totaling $82 billion. The United States represented $68 billion of those losses, reflecting the country's large concentration of insured homes, businesses and other high-value property.
First Street Chief Economist Jeremy Porter told CBS News the storms have become "top of mind" for insurers, asset owners and homeowners. He said insurers have largely remained in affected markets but are raising premiums more rapidly, particularly across parts of the Midwest and northern Texas as severe storms become more frequent. Illinois, Ohio, North Carolina and Georgia were identified among the states facing elevated exposure because of their concentration of valuable real estate.
Housing Pressure
The findings come as the U.S. housing market continues to face mounting affordability challenges. The country remains short an estimated 4.7 million homes despite more than 300,000 vacant residential lots currently listed for sale that could help ease the shortage.
At the same time, homebuilders continue to grapple with a shortage of skilled construction workers, rising labor and material costs, and housing starts that have fallen to their lowest level since 2020, limiting the pace of new supply.
Climate risk is also becoming an increasingly important consideration across the real estate sector. Rising insurance costs, insurer withdrawals from high-risk markets and more frequent extreme weather events have begun influencing property valuations and investment strategies, reflecting a broader shift in how climate exposure is assessed.
Affordability pressures have persisted as elevated home prices, higher mortgage rates, construction cost inflation and elevated housing inventory continue to weigh on the housing market. Against that backdrop, First Street's findings suggest increasingly costly severe convective storms could place additional pressure on homeowners through rising insurance costs.