Verisk Reports Sharp Rise in Catastrophe Losses; NJ Workers’ Comp Managed Care Focuses on Specialized Networks
Verisk’s 2025 Global Modeled Catastrophe Losses Report signals a significant shift in global property insurance risk, estimating average annual losses from natural catastrophes at $152 billion—a 25% rise from the previous year. Notably, frequent smaller events such as severe thunderstorms now cause twice the financial impact of major disasters like hurricanes and earthquakes, reflecting a new norm for insurers. This transition underscores the growing importance of addressing recurring catastrophe events, which contribute $98 billion to total losses, compared to traditional modeling focused on sporadic mega-disasters.
Actual insured losses have increased over recent years, averaging $132 billion annually in the last five years, up from $104 billion in the preceding period. Property exposure has expanded by 7% annually from 2020 to 2024, driven by inflation and continued construction in high-risk areas. While climate change accounts for a modest 1% of the year-over-year increase, the combined impact of exposure growth and frequency of events presents compounding challenges for the insurance sector.
Regional disparities in insurance coverage significantly affect risk profiles globally. North America exhibits comparatively strong insurance coverage, with insured losses representing nearly half of economic losses. Conversely, Asia and Latin America show protection gaps with insured losses covering only 12% and 32% respectively, raising concerns given increasing urbanization and exposure growth in high-risk zones worldwide.
In North America, wildfire risk escalation is notable, with recent fires causing economic losses up to $65 billion, 60-70% of which are insured. These trends demand that insurers adapt risk management strategies to incorporate the cumulative effects of frequent smaller disasters alongside guarding against rare catastrophic events.
Separately, the workers’ compensation sector in New Jersey highlights the distinct operational differences between Workers’ Compensation Managed Care Organizations (WCMCOs) and traditional Managed Care Organizations (MCOs). WCMCOs specialize in managing occupational injuries with focused provider networks that emphasize timely treatment, regulatory compliance, and return-to-work outcomes.
Horizon Casualty Services (HCS), an affiliate of Horizon Blue Cross Blue Shield of New Jersey, maintains a 30-year established Outcomes Focused Network (OFN) tailored to occupational health, ensuring claimants receive specialized care from providers experienced in managing work-related injuries. This focused approach enhances diagnostic accuracy, reduces complications, and facilitates efficient claims processing through early intervention.
Employers in New Jersey hold the right to select treating physicians for workers' compensation claims, making robust provider networks critical for directing care early in the claims process. This early direction supports consistent, goal-oriented treatment plans that improve recovery outcomes and align with return-to-work objectives.
Provider network management under WCMCO frameworks includes rigorous quality audits, adherence to evidence-based guidelines like the Official Disability Guidelines (ODG), and close communication across stakeholders. This structure aims to reduce unnecessary procedures and appeals, promoting efficiency within the claims ecosystem.
Overall, the evolving catastrophe risk landscape and specialized workers’ compensation care models underscore the need for adaptive strategies within the insurance industry to manage growing frequency and complexity of losses. Providers, insurers, and employers benefit from integrated approaches that combine precise risk assessment, specialized medical networks, and regulatory compliance to improve outcomes and cost control.