Heat puts new pressure on Switzerland’s resilience, says Swiss Re Institute
Switzerland has built strong resilience to floods, storms and other natural hazards. Swiss Re Institute analysis shows that extreme heat is putting that resilience to the test, as the country warms more than twice as fast as the global average according to Swiss Academy of Sciences.[1] Heat can act as a risk amplifier affecting health, agriculture, water, energy and infrastructure while increasing the potential for natural hazards such as floods. Within the context of its new Resilient Switzerland initiative, which aims to foster a shared understanding of risk to help strengthen Switzerland’s resilience, Swiss Re’s inaugural Schweizer Resilienz-Tag on 26 June 2026 will bring together key public and private stakeholders to discuss practical responses and local adaptation measures to extreme heat.
Gianfranco Lot, Swiss Re’s Country President Switzerland, said: “Switzerland is well prepared for floods and storms. But heat is a different kind of risk: less visible, harder to insure, and able to amplify risks the country already manages well. For heat, resilience means shade on the street, cool rooms in care facilities, safer hours for outdoor work and risk sharing where losses cannot be prevented.”
Climate data show that Switzerland now experiences about 10 to 15 hot days a year, defined as days when the daily maximum temperature reaches 30°C or more, compared with about five in 1990. Cities are particularly exposed: Swiss cities warm faster during the day and cool down more slowly at night, with temperatures reaching up to 6°C higher than in surrounding rural areas. Prolonged heat and tropical nights, when temperatures do not fall below 20°C, make it harder for buildings to cool down and for people to recover.
The human impact may be less obvious than damaged buildings or flooded cellars, but it can be severe. Extreme heat raises the risk of heatstroke, dehydration, cardiovascular strain and aggravated respiratory illness, particularly among elderly people and people with pre-existing conditions. The 2003 European heatwave increased Swiss mortality by about 1.5% that year, showing how quickly heat can affect health and put pressure on care systems.
Heat also changes familiar natural-hazard risks. Flood remains Switzerland’s main insured natural-catastrophe risk, accounting for around 60% of average annual insured exposure-normalised losses, Swiss Re Institute data show. After periods of intense heat, dry soils are less able to absorb water, increasing flash-flood potential when heavy rain falls. Drought can leave crops more vulnerable to hail damage, while rising temperatures and thawing permafrost can destabilise Alpine slopes. The Blatten rock and ice avalanche in May 2025 caused an insured loss of CHF 320 million and illustrates how chronic change can already influence the risk landscape associated with severe loss events today.
Local action determines heat resilience
Switzerland already has important foundations in place, including heat warnings, city heat indicators and protection measures for vulnerable people. Because many homes, schools, care facilities and workplaces were designed for cooler conditions, adaptation has to happen locally, involving municipalities, health services, infrastructure operators and emergency planners, and others.
Across Swiss communities, adaptation is already taking shape through land-use planning, redesigned public spaces, more shade and water, unsealed surfaces and heat-conscious urban development. The Schweizer Resilienz-Tag, hosted by Swiss Re on 26 June 2026 at its Centre for Global Dialogue in Rüschlikon, will examine how local responses and respective enabling factors can strengthen resilience to extreme heat.
The event is part of Swiss Re’s Resilient Switzerland Initiative and will bring together municipalities, cantons, the federal administration, science, business, civil society and the re/insurance sector to strengthen risk understanding, local implementation and multi-stakeholder cooperation on extreme heat.
[1] Die Schweiz im Klimawandel: Rasches Handeln bietet viele Vorteile. Swiss Academy of Sciences, 2026.
2025 marks sixth year insured natural catastrophe losses exceed USD 100 billion, finds Swiss Re Institute
2025 insured losses from natural catastrophes set to reach USD 107 billion, mainly driven by LA wildfires and severe convective storms in the US
LA wildfires costliest ever wildfire event globally with insured losses of USD 40 billion
Hurricane Melissa costliest hurricane of 2025 with estimated insured losses of up to USD 2.5 billion in otherwise benign season
Insured losses from natural catastrophes again surpass the USD 100 billion mark in 2025 for the sixth consecutive year. This is mainly driven by the unprecedented LA wildfire loss record in the first quarter of 2025 and severe convective storms (SCS), which remain a major and persistent global loss driver. Overall, Swiss Re Institute estimates total insured losses in 2025 at USD 107 billion, 24% lower than the USD 141 billion recorded in 2024.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, says: “Amid annual volatility, insured losses keep rising. That’s why strengthening prevention, protection and preparedness is essential to protect lives and property. Reinsurers and the broader insurance sector have a dual role: acting as financial shock absorbers and supporting the development of resilient, risk-informed public policy and private investment that reduce future losses.”
US events are the main driver of global insured natural catastrophe losses
With 83% of estimated global insured losses of USD 107 billion, the US is again the most affected market in 2025 (USD 89 billion). This was driven primarily by wildfires and SCS.
2025 produced the highest insured wildfire losses on record (USD 40 billion). The scale of destruction reflects a convergence of meteorological drivers, such as extended hot, dry conditions and strong winds, with greater exposure – especially housing and high-value residential assets expanding into hazardous wildland-urban interface (WUI) zones.
Persistent losses from severe convective storms
Global insured losses from severe convective storms reached USD 50 billion this year, making 2025 the third costliest year after 2023 and 2024 and continuing a multi-year upward trajectory. There was much SCS activity in the first half of 2025 in the US, with several severe tornado outbreaks in March and May driving above-average tornado and wind reports, while hail activity remained close to average. SCS activity in the second half of the year so far has been muted, with both hail and broader thunderstorm impacts running below seasonal norms.
In Europe, notable hailstorms occurred in May and June, though insured losses were limited as the most intense activity affected regions with lower concentrations of high-value exposure. Overall, SCS remains a major contributor to global natural catastrophe losses.
Balz Grollimund, Swiss Re’s Head Catastrophe Perils, says: “We are observing a steady rise in losses from severe convective storms. Urbanisation in hazard-prone areas, rising asset values, higher construction costs and factors such as ageing roofs have made these storms a key peril for insurers. As single events rarely result in a large insured loss, it is key for insurers to consider the cumulative effect of frequent, low-loss events, along with increasing property values and repair costs. A more holistic view of this peril is critical to assure proper underwriting and risk management.”
Low hurricane losses, despite an active season
Hurricane Melissa made landfall in southwestern Jamaica in October as a Category-5 hurricane, with estimated winds near 298 km/h – the strongest storm ever to strike Jamaica and one of the most powerful Atlantic hurricanes on record when making landfall. It caused catastrophic wind damage, severe flooding and landslides across Jamaica and also affected Haiti and Cuba.
Hurricane Melissa is currently the costliest hurricane event of 2025, with estimated insured losses of up to USD 2.5 billion, finds Swiss Re Institute. The North Atlantic (TCNA) tropical cyclone season has seen 13 named storms, 5 hurricanes, 4 major hurricanes and three Category-5 hurricanes (Erin, Humberto and Melissa). For the first time in ten years, none of these hurricanes made landfall on the US coast, which explains why insured losses from this peril are set to be low in 2025.
Severe flooding in Southeast Asia in late November
Southeast Asia has experienced severe river and flash-flooding events in November, specifically Vietnam, Thailand and Indonesia. A complex set of weather systems involving the interaction of multiple cyclonic systems and an intensified monsoon under La Niña conditions created a destructive combination of rain, landslides and flash floods resulting in widespread devastation.
Adaptation and early warning systems can save lives
In July this year, an 8.8 magnitude earthquake struck off the eastern coast of Russia near the Kamchatka Peninsula, becoming the sixth-largest recorded earthquake since 1900. The earthquake generated tsunami waves that reached Hawaii and coastal areas of the US mainland.
The earthquake and subsequent tsunami-response have been considered a success of early warning systems (EWS), protecting at-risk populations through evacuation and alerts. The effective and coordinated early warning provided by the Pacific Tsunami Warning System (PTWS) saved countless lives. The minimal destruction to Russian coastal communities can be attributed to significant reforms in city planning based on experiences from previous events.
Table: Total economic and insured losses in 2025 and 2024(USD billion in 2025 prices)
2025
2024
10-yr avg*
% change vs 10-y avg
Economic losses
233
338
280
–17%
Nat cat
220
327
267
–18%
Man-made
13
11
13
–
Insured losses
118
151
121
–3%
Nat cat
107
141
111
–3%
Man-made
11
9
10
5%
* Note: 10-yr average refers to the average losses between 2015 and 2024.
Due to rounding, some totals may not correspond with the sum of the separate figures.
Loss estimates in this press release are preliminary and are subject to change as not all loss-generating events have been fully assessed yet.
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Wildfires and severe thunderstorms in the US drive global insured losses to USD 80 billion in first half of 2025, Swiss Re Institute estimates
Global insured losses from natural catastrophes reach USD 80 billion in the first half of 2025 according to Swiss Re Institute’s preliminary estimates. This is almost double the 10-year average and more than half of the USD 150 billion (in 2025 prices) projected for the full year, following the long-term annual growth trend of 5–7%. With natural catastrophe activity typically higher in the second half of the year, total insured losses for 2025 could therefore exceed the projection.
The wildfires that swept through parts of Los Angeles County in January constitute the largest-ever insured wildfire loss event by far, resulting in estimated insured losses of USD 40 billion. This exceptional loss severity was due to a prolonged Santa Ana winds season coupled with a lack of rainfall, allowing the fires to spread rapidly and destroy more than 16 000 structures in an area with some of the densest concentration of high-value single-family residential property in the US.Losses from wildfires have risen sharply over the past decade as rising temperatures, more frequent droughts and changing rainfall patterns converge with suburban sprawl and high-value asset concentration. Before 2015, wildfire-related insured losses made up around 1% of all natural catastrophe claims. With eight of the ten costliest wildfire events on record occurring in the past ten years, the share of insured losses related to wildfires has increased to 7%.
Wildfires are an ever-present hazard in hot and dry regions with large areas of vegetation, such as there are in North America. The single biggest loss growth driver for this peril is increased exposure in such hazardous regions. Due to the combination of high hazard and high value asset 2/4 concentration, most fire losses originate in the US and particularly in California, where expansion in hazardous regions has been high. Since 1990, exposure growth in the high-risk wildland urban interface (WUI) zones has outpaced exposure growth in non-WUI zones by a factor of 1.8 in the US, and by a factor of 1.9 in California.
Severe thunderstorms continue to be major loss driver
Insured losses from severe thunderstorms (severe convective storms, SCS) amounted to USD 31 billion in the first half of 2025. While the year saw several damaging thunderstorms with large hail and tornado outbreaks in the US, the overall SCS-triggered losses fell below both Swiss Re Institute’s trend estimate of USD 35 billion and the recordbreaking events of 2023 and 2024. Nevertheless, SCS continue to be a major driver of global natural catastrophe insured losses, with year-onyear volatility underscoring their persistent threat to property and infrastructure.
Urbanisation in hazard-prone areas, rising asset values and inflation have amplified the financial impact of severe thunderstorms. As exposure continues to grow and reconstruction becomes more expensive, Swiss Re Institute expects losses from this peril to increase over time.
Jérôme Haegeli, Swiss Re’s Group Chief Economist, says: “The strongest lever to increase the resilience and safety of communities is to double down on mitigation and adaptation. It’s here that everyone can help reduce losses before they occur. While mitigation and adaptation measures come at a price, our research shows that, for example, flood protection measures such as dykes, dams and flood gates are up to ten times more cost-effective than rebuilding.”
Further examples for adaptation measures include enforcing building codes, strengthening zoning laws, increasing flood protection and discouraging settlement in areas prone to natural perils.
The magnitude 7.7 earthquake that hit Myanmar in March was a human tragedy, resulting in a high number of fatalities. Shockwaves were felt as far away as Thailand, India and China, causing estimated insured losses of USD 1.5 billion in Thailand alone.
Focus on hurricane season in second half of 2025
The second half of the year started with the warming effects of a major heat dome that led to temperatures in excess of 40°C in western and central Europe in late June, and with wildfire outbreaks in several countries. In the US, torrential rains led to catastrophic flash flooding in central Texas in July.
With the US season for SCS past its peak, the focus for the second half of the year shifts to the North Atlantic hurricane season that typically peaks in early September. Forecasts indicate near- to above-average activity, with three to five major hurricanes – above the long-term average of three.
For insurers and exposed communities, the key factor determining the scale of losses is where a hurricane hits. The 20-year anniversary of 3/4 Hurricane Katrina serves as a reminder that tropical cyclones, in particular major hurricanes, pose substantial risk to the eastern and Gulf Coasts of North America, as well as the Caribbean. For coastal communities, preparation and advance resilience are essential to minimise the impact.
Balz Grollimund, Swiss Re’s Head Catastrophe Perils, says: “Reinsurers not only act as a shock absorber for peak risks. They also have a crucial role to help the world prepare and respond to the growing natural catastrophe risk by understanding, quantifying and transferring the risk. Their models and tools pave the way for partnerships in public and private sectors that provide innovative, practical answers and help communities get back on their feet faster.”
With 60% of annual natural catastrophe insured losses historically occurring in the second half of the year, the period ahead remains fraught with uncertainty. Losses fluctuate greatly year-on-year, with random fluctuations mostly due to natural weather variability. Should current loss trends continue, global insured losses from natural catastrophes in 2025 could exceed Swiss Re Institute’s projections of USD 150 billion in 2025 prices. However, this outcome remains contingent on the evolution of major perils in the coming months.
Total economic and insured losses in H1 2025 and H1 2024
USD billion
H1 2025
H1 2024
H1 10-y avg*
% change vs 10-y avg
Economic losses
143
130
106
35%
Nat cat
138
123
99
36%
Man-made
8
8
7
14%
Insured losses
87
69
47
85%
Nat cat
80
62
41
95%
Man-made
7
7
6
17%
*Note: H1 10-year average refers to the average first-half losses between 2015 and 2024
US tariffs to slow both global economic and insurance premium growth, says Swiss Re Institute
Global growth is decelerating as US tariff policy reduces trade and heightens uncertainty. Consumers and firms have likely already begun cutting spending and investments in response to the uncertainty, which may not be fully visible in the economic data yet. According to Swiss Re Institute’s World Insurance sigma, global GDP growth (inflation adjusted) is expected to slow to 2.3% in 2025 and 2.4% in 2026 from 2.8% in 2024. The global insurance industry is expected to follow the trend with total premiums expected to slow to 2% this year from 5.2% in 2024, picking up marginally to 2.3% in 2026.
Jérôme Haegeli, Swiss Re’s Group Chief Economist, says: “While insurers’ profitability outlook is still benefiting from rising investment income, we expect tariffs to slow global GDP growth, and consequently weigh on insurance demand. In the long term, US tariff policy is another move towards more market fragmentation, which would reduce the affordability and availability of insurance, and so diminish global risk resilience.”
Tariffs will be a stagflationary shock for the US
The volatile nature of US policy changes under the current administration has ushered in a paradigm shift of diminished confidence in the US government, eroding its status as a “safe haven” for global capital. Consequently, Swiss Re Institute has lowered growth expectations for most major economies in 2025.
After several years of the fastest growth in the US (compared to Canada, UK, Germany, Italy, France, Japan, Australia) post-pandemic, US GDP growth is forecast at 1.5% this year (slowing from 2.8% in 2024). As global supply chains become less efficient and domestic US industries more protected from international competition, US inflation will likely move structurally higher on average. Jérôme Haegeli, Swiss Re’s Group Chief Economist, says: “US consumers will be hit hardest by US’ tariff policy and cut their spending as a consequence of higher prices. This in turn will weigh on US growth which mostly depends on household consumption.”
Later in 2026, Swiss Re Institute forecasts a rebound from the 2025 tariff shock, with somewhat firmer growth of 1.8% as the US economy adjusts to a “new normal” of higher tariff rates, supported by a stabilisation in labour market conditions. Over the medium to long term, however, the reduced flow of goods, services, capital and people is expected to pose a structural headwind to potential growth.
In Europe, policy uncertainty alone will weigh on economic activity, and result in unchanged growth at 0.8% this year. US-EU trade negotiations are the main risk to the baseline outlook. However, weaker 2025 growth could give way to a brighter picture in 2026. A more expansionary fiscal stance by the new German government as well as supportive credit conditions due to further interest rate cuts from the ECB should push euro area growth to 1.3% next year. Meanwhile, China’s GDP growth is expected to slow to 4.7% compared to 5.0% in 2024 as tariffs and persistent uncertainty disrupt economic activity.
The risks and costs of the accelerating fragmentation of economies and markets may be serious for insurance. Trade barriers and supply chain disruption or reshoring may push up inflation for prolonged periods, feeding into higher claims costs. Restrictions on cross-border capital flows for re/insurers can lead to inefficient capital allocation and higher capital costs, ultimately leading to higher insurance prices and possibly curtailing the insurability of peak risks.
Premium growth slows, while profitability outlook remains positive
After a strong 2024, growth in the global insurance industry is slowing in both life and non-life sectors. Swiss Re Institute forecasts 2% year-on-year total premium growth in 2025 and 2.3% in 2026, about half the growth rate of 2024.
In non-life insurance, intensifying competition in personal lines and softening market conditions across commercial lines, are driving significantly lower premium growth, down to 2.6% this year from 4.7% in 2024. After delivering 6.1% premium growth in 2024, life insurance will slow significantly to 1% as interest rates moderate, with growth to improve to 2.4% in 2026. At the same time, insurers’ profitability outlook remains positive due to continuing gains in investment income.
US-motor most tariff-impacted insurance sector
Tariffs will affect the insurance industry differently across geographies. Swiss Re Institute expects greatest impacts in the US, though these should be manageable, and relatively limited effects outside of the US.
The main direct transmission mechanism is likely to be in claims severity, as import costs increase, most notably in US motor and construction lines. US motor physical damage is the most tariff-impacted insurance sector. US tariffs are expected to increase prices for auto parts used for repairs, as well as new and used car prices for vehicle replacement. However, claims severity increases should be modest compared with the post-COVID-19 inflationary impact. US motor repair and replacement costs are expected to grow by 3.8% in 2025. Nevertheless, this is still lower than the annual increase in 2021 (14%) and 2022 (13%).
More positively, tariffs and uncertainty may create some opportunities for insurers. A heightened awareness of risk typically benefits insurers, provided that the economic shock is not severe. This is particularly the case for lines of business offering protection against economic and financial disruption, such as credit and surety insurance. Marine insurance outside the US could benefit from supply chain realignment if other economic blocs increase trade among themselves. Insurance demand could be boosted by growth from fiscal stimulus, for example in China and the EU, as well as potentially looser monetary policies.
World’s 20 largest insurance markets by nominal premium volumes, 2024 vs 2023:
Rank
Country
Total premium volume (USD bn)
Global market share
2024
2023
% change
2024
2023
1
United States
3,497
3,233
8.1%
44.8%
44.4%
2
China
792
724
9.4%
10.2%
9.9%
3
United Kingdom
485
454
6.8%
6.2%
6.2%
4
Japan
339
363
–6.6%
4.4%
5.0%
5
France
292
264
10.8%
3.8%
3.6%
6
Germany
266
254
5.0%
3.4%
3.5%
7
Canada
181
172
4.7%
2.3%
2.4%
8
Italy
180
157
14.6%
2.3%
2.2%
9
South Korea
176
177
–0.8%
2.3%
2.4%
10
India
141
136
4.0%
1.8%
1.9%
11
Netherlands
99
92
7.0%
1.3%
1.3%
12
Brazil
89
86
3.8%
1.1%
1.2%
13
Taiwan
84
78
8.2%
1.1%
1.1%
14
Spain
81
83
–1.4%
1.0%
1.1%
15
Australia
75
75
0.3%
1.0%
1.0%
16
Hongkong
74
67
11.3%
1.0%
0.9%
17
Switzerland
63
61
3.2%
0.8%
0.8%
18
Sweden
53
44
18.9%
0.7%
0.6%
19
Mexico
51
45
13.5%
0.7%
0.6%
20
Belgium
50
47
5.0%
0.6%
0.7%
Top 20 markets
7,068
6,612
6.9%
90.6%
90.9%
World
7,799
7,276
7.2%
Source: Swiss Re Institute, 3 July 2025
Hurricanes and earthquakes could lead to global insured losses of USD 300 billion in a peak year, finds Swiss Re Institute
2025 started with wildfires in Los Angeles, causing an estimated USD 40 billion in insured losses. While these losses from a secondary peril are substantial, primary perils remain the biggest threat: when a severe hurricane or strong earthquake hits a densely populated urban area, insured losses in that year could be more than double the long-term loss trend. Based on model analysis, Swiss Re Institute estimates that hurricanes and earthquakes could drive global insured losses to USD 300 billion or more in a peak year.
Urs Baertschi, CEO Property & Casualty Reinsurance at Swiss Re, said: “In addition to helping clients with traditional risk transfer, reinsurers also provide data, risk insights and knowledge about where dangers lie. The reinsurance industry is a shock absorber when danger materialises into disaster and an essential discussion partner around risk awareness and risk prevention.”
Peak years, due to a few primary-peril events or the accumulation of both secondary-peril and primary-peril events, should not be considered an anomaly. The most recent peak year was 2017, driven by Hurricanes Harvey, Irma, and Maria. Since then, underlying risk has increased continuously with economic and population growth as well as urban sprawl, including in areas vulnerable to natural catastrophes. In addition, climate change effects are playing a role in compounding losses for some weather perils and regions.
Balz Grollimund, Swiss Re’s Head of Catastrophe Perils, said: “Our recent analysis of over 200 in-house models and the loss trend over the last 30 years show what is at stake: When a severe hurricane or a major earthquake hits an urban area in a country with significant insurance take-up, insured losses could easily reach USD 300 billion in that year.”
According to Swiss Re Institute estimates, some of the hurricanes from the early 20th century would cause losses well over USD 100 billion if they were to strike today. For example, Hurricane Andrew in today’s prices caused USD 35 billion in insured losses in 1992. If a hurricane were to strike the same path today, it would cause losses nearly three times higher, due to economic growth, population increase and urban sprawl. Meanwhile, Hurricane Katrina, the costliest single insured loss event for the re/insurance industry ever, would not cause the same destruction as 20 years ago. Insured losses would still reach around USD 100 billion due to rising housing and construction costs, but improved flood defences and a 20% decrease in local population along Katrina’s path have significantly reduced exposure.
Exposure to natural catastrophes drives US insurance claims costs
While loss severity is rising globally, the US accounted for almost 80% of global insured losses in 2024, due to its vulnerability to severe thunderstorms, hurricanes, floods, wildfires and earthquakes. Insurance premium rates are informed by many factors including local regulations and inflation. Yet in the long-run and across geographies, the main factor determining claims cost and premium rates is exposure to natural perils. This is evident in states like Florida, Texas, California, Louisiana and Colorado, which account for about 50% of all natural catastrophe losses in the US. Florida faces high hurricane-related losses, with premiums per household twice the national average. Similarly, in California, the highest premiums are localised in areas with greatest exposures to wildfire risk.
As natural catastrophe losses continue to rise, it is crucial to reduce loss potential from the outset, both to reduce the cost of insurance and to maintain the viability of risk transfer business. For example, severe storms can overwhelm local protection systems and cause flooding, and while mitigation measures come at a price, a recent Swiss Re Institute study shows that flood protection through dykes, dams and flood gates is up to ten times more cost-effective than rebuilding after a disaster.
Jérôme Haegeli, Swiss Re’s Group Chief Economist, said: “Close collaboration between the public and private sectors is vital for effective protection measures to reduce losses. In addition, a well-capitalised reinsurance sector, backed by USD 500 billion in capital, acts as a vital shock absorber, helping communities and economies recover more quickly. That is why it is important that capital grows in line with rising risk, for the industry to fulfil their role for future peak years.”
Total economic and insured losses in 2024 and 2023
In 2024, global insured losses from natural catastrophes reached USD 137 billion, driven by Hurricanes Helene and Milton, severe convective storms in the US, wildfires and major floods worldwide.
USD billion in 2024 prices
2024
2023
Previous 10-y average
Economic losses (total)
328
303
254
Natural catastrophes
318
292
242
Man-made catastrophes
10
11
13
Insured losses (total)
146
125
108
Natural catastrophes
137
115
98
Man-made catastrophes
9
10
10
Note: Due to rounding, some totals may not correspond with the sum of the separate figures.Source: Swiss Re Institute
Hurricanes, severe thunderstorms and floods drive insured losses above USD 100 billion for 5th consecutive year, says Swiss Re Institute
Estimated insured losses from natural catastrophes on track to exceed USD 135 billion in 2024
Hurricane Helene and Hurricane Milton severely impacted the US, resulting in estimated insured losses approaching USD 50 billion
Major floods hit Europe and the Middle East, causing estimated insured losses of close to USD 13 billion as of today
With 1.54°C above the pre-industrial average, 2024 is set to become the hottest year on record. A warming climate favours the occurrence of many of the natural catastrophes observed in 2024. Europe, in particular, has experienced intense flooding in 2024, resulting in the second-highest insured losses from floods in the region ever, according to Swiss Re Institute’s estimates. The US has been affected by two major hurricanes and a high frequency of severe thunderstorms, making up at least two thirds of 2024’s global insured losses of more than USD 135 billion as of today’s estimates.
Balz Grollimund, Swiss Re’s Head Catastrophe Perils, says: “For the fifth consecutive year, insured losses from natural catastrophes break the USD-100-billion mark. Much of this increasing loss burden results from value concentration in urban areas, economic growth, and increasing rebuilding costs. By favouring the conditions leading to many of this year’s catastrophes, climate change is also playing an increasing role. This is why investing in mitigation and adaptation measures must become a priority.”
Flood risk is rising globally
In 2024, severe floods in Europe and the UAE resulted in estimated insured losses of close to USD 13 billion to date. It was the third-costliest year for this peril globally and the second costliest for Europe which experienced insured losses of approximately USD 10 billion, according to Swiss Re Institute’s estimates.
Intense precipitation in April caused floods in the Gulf region, disrupting the operations of the world’s busiest airport of Dubai. In September, Storm Boris caused major floods in Central Europe, mainly affecting the Czech Republic, Poland and Austria. Additional impacts were reported from Slovakia, Romania, Italy and Croatia. While so-called Vb lows – slow-moving, low-pressure systems – are nothing unusual in the region, the strong intensity of the Vb system connected to Storm Boris is favoured by conditions related to climate change. Storm Boris mixed cold Arctic air flowing southwards with unusually warm air from the east and south, drawing moisture from a record-breaking warm Mediterranean Sea.
In October, large parts of Spain experienced heavy rainfall, flash floods and hailstorms, which caused severe damage. The floods were worst in eastern and southern Spain, with most of the damage across the Valencia and Castilla-La Mancha regions. Andalusia and the Balearic Islands were also affected. One year’s average precipitation was dumped in less than eight hours in many locations. Steep clay terrain and drainage systems could not absorb the exceptional amount of water, leading to fast overflows.
Pluvial floods can severely affect urban areas
Floods come in varied forms. The most common are fluvial and pluvial floods, and in coastal areas, storm surge floods. Fluvial floods can happen after periods of heavy rainfall. They usually affect areas close to rivers where flood waves can build up gradually or rapidly and last for a longer period. Pluvial floods can happen anywhere and affect all kinds of (urban) areas. They cause flash floods after extreme rainfall in a short period of time because large parts of soil are sealed and therefore cannot absorb the excess of water as drainage systems are overwhelmed. Floods can also manifest as secondary effects of primary perils. This is the case for tropical-cyclone-induced flooding from storm surge and rainfall.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, says: “Economic development continues to be the main driver of the rise in insured losses resulting from floods, but also other perils, seen over many decades. However, with natural catastrophe risks rising and higher price levels, the annual increase of 5–7% in insured losses will continue, and protection gaps could remain high. This highlights the need for adaptation in combination with an adequate insurance coverage that can support financial resilience.”
Losses are likely to increase as climate change intensifies extreme weather events while asset values increase in high-risk areas due to urban sprawl. Adaptation is therefore key, and protective measures, such as dykes, dams and flood gates, are up to ten times more cost-effective than rebuilding.
2024: Hurricanes and severe thunderstorms, with US hardest hit
At least two thirds of this year’s insured losses are attributable to the US: Two major hurricanes made landfall within a fortnight on the coast of Florida in September and October this year. Hurricane Helene made landfall as a major hurricane on 27 September, followed by Hurricane Milton on 9 October. Insured losses from both hurricanes are expected to amount to below USD 50 billion as of today. Additionally, 2024 experienced a high frequency of severe thunderstorms (severe convective storms, or SCS), which affected mostly the US. Insured losses from SCS are expected to add more than USD 51 billion globally for 2024 as of today, the second-highest loss after the record high of approximately USD 70 billion in 2023.
Table 1: Estimated total economic and insured losses in 2024 and 2023
(USD billion in 2024 prices)
2024
2023
Annual change
Previous10-y average
Economic losses (total)
320
302
6%
254
Nat cat
310
291
6%
241
Man-made
10
11
–8%
13
Insured losses (total)
144
125
16%
108
Nat cat
135
115
17%
98
Man-made
9
10
–7%
10
Source: Swiss Re Institute
Life insurance set to boom as interest rates surge, says Swiss Re Institute
Higher interest rates around the world are transforming the outlook for life insurance growth and profitability. Savings products are attractive to consumers after a decade of weak demand and low returns. Swiss Re Institute expects a new high for US fixed annuity sales this year after record sales in both 2022 and 2023.
Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist, says: “Higher interest rates are a game changer, providing life insurance and pension products a tailwind to much better tackle the retirement savings challenges of ageing demographics. Savings products are attractive again as a direct consequence of normalising interest rates. Higher investment yields also benefit long-duration protection products.”
In its new sigma study, “Life insurance in the higher interest rate era: asset-savvy is the new asset-light”, Swiss Re Institute forecasts an additional USD 1.5 trillion in global insurance savings premiums over the next decade, as consumers are moving to buy life-savings products that secure higher retirement incomes. As a result, total global premiums are forecast to grow to USD 4 trillion by 2034. In contrast, global life insurance premiums grew by only USD 300 billion in the entire low interest rate decade of 2010 to 2019.
Paul Murray, Swiss Re’s CEO Life & Health Reinsurance, says: “Higher interest rates give consumers more attractive options to secure their retirement income and we are seeing very positive market growth for life insurance to meet this need. Higher interest rates also allow insurers to meet their cost of capital. Reinsurers can furthermore support life insurers by freeing up capital, boosting underwriting capacity and focusing on product innovation for capital-light growth.”
Significantly higher government bond yields are also now improving life insurers’ investment returns and margins for fixed annuities. Between 2022 and 2027, Swiss Re Institute forecasts the operating result for insurers in the largest eight life markets worldwide, which include the US, UK, Germany and Japan, to rise by more than 60% as investment income rises by 40%. The growth in life insurance products is an important mechanism to close the retirement savings gap, which Swiss Re Institute estimated at USD 106 trillion in 2022 for six advanced economies plus China and India.
Advanced markets to lead growth
Swiss Re Institute estimates that advanced markets will generate about 61%, or USD 900 billion, of additional premiums in absolute terms in the next decade, and emerging markets an additional 39% or USD 578 billion.
China alone will generate around 17% of the overall global additional premiums, adding USD 256 billion between 2025 and 2034.
The life insurance landscape is changing
Swiss Re Institute’s report also outlines the structure of the life insurance industry. It analyses how listed (stock) insurers, mutual insurers and private equity-owned business have reacted to a decade of low interest rates, for example by exiting core lines of business or shifting towards capital-light, fee-based strategies. The report examines how new market entrants from private equity absorbed the divested traditional assets through reinsurance transactions. Insurers and asset managers turned to alternative and illiquid investments to earn additional yield.
Today, insurers are expanding their asset management capabilities to grow their savings business, and private equity investors bring extensive asset management capabilities. Swiss Re Institute anticipates competition on asset management in life insurance, with, for example, large insurers acquiring private credit capabilities, and asset managers potentially acquiring insurance companies. Consumers should benefit from this environment through more attractive returns.
The report also explores the effects of rising yields on associated risks for life insurance, such as the threat of surging lapse rates. Swiss Re Institute analysis into lapse risk concludes that the peak is likely to have passed. Rising rates have also increased credit risk, particularly in areas such as commercial real estate, but the exposures of life insurers are viewed as manageable, on average.
Swiss Re Institute’s publication “Life insurance in the higher interest rate era: asset-savvy is the new asset-light” is available here.
Hurricane Ian drives natural catastrophe year-to-date insured losses to USD 115 billion, Swiss Re Institute estimates
Hurricane Ian and other extreme weather events such as the winter storms in Europe, flooding in Australia and South Africa as well as hailstorms in France and in the US resulted in an estimated USD 115 billion of natural catastrophe insured losses this year to date, according to Swiss Re Institute. 2022 is the second consecutive year in which the estimated insured losses total more than USD 100 billion, continuing the trend of a 5–7% average annual increase over the past decade. The re/insurance industry covered roughly 45% of the economic losses this year, indicating a large protection gap across the world.
Thierry Léger, Group Chief Underwriting Officer, said: “2022 has been another year of increased natural catastrophe loss activity, and demand for insurance is growing as the protection gap remains vast. To enable the insurance industry to keep up with increasing volatility and demand, it will be key to model evolving frequency and severity trends. Pricing needs to reflect the effective risk. In this complex environment, Swiss Re is ready to support clients with our strong balance sheet, risk capacity and expertise.”
Hurricane Ian is this year’s costliest natural catastrophe with estimated preliminary insured losses of USD 50–65 billion. The category 4 hurricane made landfall in western Florida in late September with extreme winds, torrential rain and storm surge. Swiss Re Institute estimates it to be the second-costliest insured loss ever on sigma records after Hurricane Katrina in 2005. This highlights the threat potential of a single hurricane hitting a densely populated coastline, in an otherwise benign hurricane year. Furthermore, in February, a series of winter storms hit Europe and prompted estimated insured losses of USD over 3.7 billion, bringing this key peril back on the insurance industry’s agenda.
This year also confirms the importance of secondary perils: In February and March, torrential rains led to widespread flooding in Australia that, at currently estimated USD 4 billion, is the country’s costliest-ever natural catastrophe. Next to numerous small to medium-sized hail- and thunderstorms in the US, France experienced the most severe series of hailstorms ever observed, with insured market losses reaching an estimated EUR 5 billion according to Swiss Re Institute.
Martin Bertogg, Head of Catastrophe Perils at Swiss Re, said: “Extreme weather events have led to high insured losses in 2022, underpinning a risk on the rise and unfolding on every continent. Urban development, wealth accumulation in disaster-prone areas, inflation and climate change are key factors at play, turning extreme weather into ever rising natural catastrophe losses. When Hurricane Andrew struck 30 years ago, a USD 20 billion loss event had never occurred before – now there have been seven such hurricanes in just the past six years. At Swiss Re, we are continuously adapting our natural catastrophe models to anticipate trend risks explicitly, enabling us to stay ahead of the curve and provide sustainable cover to our clients – such as with our new hurricane model.”
The insurance industry is managing natural catastrophe risk, building on state-of-the-art simulation-based modelling for many perils. However, the 2022 loss experience, compounded by the previous five years, emphasizes a need to adopt a more forward-looking approach for all perils. Model and data availability need to be upscaled for secondary perils such as flood and hail particularly, as they are on the rise but still receive less industry attention.
Swiss Re continuously updates its proprietary models to embed new insights from science, while also tracking macro risk trends like urbanization, inflation and climate change. For example, flooding from hurricane-induced rainfall is now explicitly modelled based on a forward-looking view of rainfall characteristics rather than long term historic rainfall averages. Furthermore, improved predictive methods were introduced to enable Swiss Re and its clients to better quantify the present-day risks.
Table1: Estimated total economic and insured losses in 2022 and 2021
Note: Preliminary and, due to rounding, some totals may not correspond with the sum of the separate figures. Source: Swiss Re Institute
These sigma catastrophe loss estimates refer to property damage and exclude claims related to COVID-19. Loss estimates in this press release are preliminary and are subject to change as not all loss-generating events have been fully assessed yet.
Extreme flood events once again drive high losses in 2021, yet 75% of flood risks remain uninsured, Swiss Re Institute reveals
Last year, global economic losses from floods amounted to USD 82 billion, yet insured losses stood at slightly more than USD 20 billion, indicating a large protection gap.
In 2021, floods accounted for 31% of global economic losses from natural catastrophes, only 2% less than tropical cyclones, according to Swiss Re Institute’s latest sigma report, “Natural catastrophes in 2021: the flood gates are open.”
Natural catastrophes in 2021 resulted in a total global economic loss of USD 270 billion and insured losses of USD 111 billion, the fourth highest on sigma records. This continues the long-term trend of insured losses increasing by an average of 5-7% annually worldwide. While Hurricane Ida was the costliest single natural disaster in 2021, secondary peril events once again accounted for the majority of insured losses from natural catastrophes over the year. The flooding in Europe in July, for example, was the costliest natural disaster on record in the region. Despite record-level insured losses from floods, the associated global protection gap remains large.
“Floods affect nearly a third of the world population, more than any other peril. In 2021 alone, we witnessed more than 50 severe flood events across the world,” said Martin Bertogg, Head of Catastrophe Perils at Swiss Re. “Given the scale of devastation, flood risk deserves the same attention and risk assessment rigour as primary perils such as hurricanes.”
Flood losses will keep increasing with climate change and urbanisationClimate change is anticipated to cause more frequent and more extreme weather events. Growing populations, rapid urban development and the accumulation of economic wealth in disaster-prone areas are contributing to the ever-growing catastrophe losses. 2021 was another year of intense natural catastrophe activity, including devastating floods in Europe, China, the US, and other parts of the world. Already in the first quarter of 2022, major flooding in eastern Australia has caused widespread devastation and substantial insured losses.
“Growing losses from floods are becoming ever more apparent,” said Jérôme Jean Haegeli, Swiss Re’s Group Chief Economist. “Last year we had another wake-up call. There is a growing urgency for action to increase the resilience of societies worldwide. Together with the public sector, re/insurers are well equipped to steer development away from high-risk areas and invest in protective measures such as green infrastructure. This keeps assets insurable while also improving the growth outlook.”
sigma records show that flooding is by far the most frequently occurring natural peril. In the past decade, there were approximately three times as many major flood events as tropical cyclones. Floods were also causing more than a third of all fatalities related to natural catastrophes. Economic losses from floods amounted to 23%, the second highest after tropical cyclones.
Yet Swiss Re Institute finds that over the past decade, only 5% of severe flood losses were insured in emerging markets and 34% in advanced economies, indicating a large global protection gap. The largest gap in flood protection is in Asia, with only 7% of economic losses being covered by insurance. By contrast, in Europe 34% of flood losses are insured.