Swiss Re, one of the world’s largest reinsurers, has issued a stark warning about the rising frequency and severity of natural catastrophes, following a report revealing that insured losses from natural disasters reached a staggering $125bn in 2022. According to Swiss Re, this worrying trend is fuelled by the growing number of valuable assets that are accumulating rapidly with economic development, urbanization, and increasing populations. The report also revealed that less than half of the $275bn of global economic losses in 2022 were insured, highlighting the existence of a significant natural catastrophe protection gap.

Swiss Re singled out the risks faced by coastal regions due to the intersection of population growth, development, and climate change, and recommended that insurers leverage risk data to better understand the evolving risks posed by natural and macro-societal hazards. The report also called for the updating of industry models to more accurately reflect trends like economic growth and the increase in built-up land. Swiss Re noted that most natural catastrophes can be modeled and priced appropriately, and proposed updating program structures, wordings, and rates to better reflect the severity of risks that reinsurers are taking on.

The report also emphasized the critical role of the insurance industry in supporting long-term adaptation to climate change, including underwriting policies aimed at facilitating a global transition to net-zero emissions by 2050. Swiss Re‘s warning highlights the urgent need for insurers to take action to protect against natural catastrophes, which are increasingly being exacerbated by climate change and rapid economic development.

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