Global insured losses are expected to double by 2025, driven by both extreme weather and human decision-making. The Geneva Association outlines urgent reforms to reduce risk exposure and strengthen insurance systems.
Natural Disasters Push Losses Over $100B Annually
Since 2020, global insured losses from hurricanes, floods, wildfires, and storms have exceeded $100 billion each year. In 2025, these losses are projected to surpass $200 billion. The Geneva Association attributes this rise not only to more frequent and severe climate events but also to human actions that increase exposure to risk.
Rising Costs and Insurance Gaps Worsen the Impact
Inflation, supply chain disruptions, and labor shortages are raising rebuilding costs. At the same time, many economic losses remain uninsured, creating a growing “protection gap.” This gap is especially wide in Asia, where low risk awareness, financial illiteracy, and reliance on disaster aid limit insurance coverage.
Property & Casualty Insurance Crucial in Risk Mitigation
The report emphasizes the vital role of property and casualty (P&C) re/insurance in helping communities manage financial losses caused by extreme weather. It reviews home insurance challenges across advanced economies, including the US, Japan, Canada, the EU, and Australia—where 15% of homes are under affordability stress.
Decisions at All Levels Contribute to Growing Exposure
Homeowners, developers, and governments often prioritize affordability over safety. Building in high-risk areas and undervaluing weather risks in property and mortgage assessments are making housing markets more vulnerable. Financial institutions also neglect to factor in insurance availability and rebuilding costs when issuing loans.
Geneva Association’s Two-Tier Strategy for Reform
The report proposes a two-part solution. First, local resilience efforts must be expanded. These include modern building codes, zoning based on risk, relocation programs, and nature-based defenses. Examples include disaster zones in Japan, Australia’s buy-back initiatives, and infrastructure upgrades in the Netherlands and Japan.
Second, systemic changes are needed in financial and insurance frameworks. This includes integrating risk data into property values, requiring insurance for mortgage approvals, disclosing hazard risks, and monitoring insurance coverage to prevent future loan defaults.
Conclusion
As climate threats escalate, insured losses are expected to surge. The Geneva Association stresses that combining local resilience measures with broader financial reforms is key to protecting homes and communities. Strengthening P&C insurance systems and improving risk management across sectors will be vital to controlling future economic fallout.
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