Swiss Re Institute has warned that insured losses could exceed $300bn in a peak year, underscoring the essential role of the reinsurance sector, which holds $500bn in capital, in absorbing large-scale shocks.
While secondary perils continue to generate significant losses, Swiss Re’s latest report emphasizes that primary perils—such as hurricanes and earthquakes—remain the largest threat, with the potential to drive peak-year losses above $300bn.
The firm noted that such years, whether caused by a few major events or a combination of primary and secondary perils, should not be seen as rare.
Swiss Re cited 2017, when Hurricanes Harvey, Irma, and Maria struck, as the most recent peak year. Since then, increasing exposure due to economic expansion, population growth, and urban development—often in catastrophe-prone areas—has raised underlying risk levels (see how Natural Catastrophes Drive Record-High Economic and Insured Losses).
Climate change has further compounded loss potential in specific regions and weather-related perils.
Balz Grollimund, Head of Catastrophe Perils at Swiss Re, said internal analysis of over 200 models and loss data from the past 30 years shows the scale of risk. A severe hurricane or major earthquake impacting a densely populated area with high insurance penetration could generate insured losses of $300bn in a single year.
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 $300 bn in that year.
Balz Grollimund, Swiss Re’s Head of Catastrophe Perils
Jérôme Haegeli, Swiss Re’s Group Chief Economist, stressed the need for public-private cooperation to implement protective measures and reduce loss exposure.
He also highlighted the importance of maintaining a well-capitalised reinsurance sector to ensure it can meet future demands. Capital growth must keep pace with rising risks for the industry to maintain its shock-absorbing function.
In addition, a well-capitalised reinsurance sector, backed by $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 its role for future peak years
Jérôme Haegeli, Swiss Re’s Group Chief Economist
Urs Baertschi, CEO of Property & Casualty Reinsurance at Swiss Re, added that reinsurers support clients not only through traditional risk transfer but also by providing data, risk assessments, and guidance on hazard awareness.
He described the reinsurance sector as a critical partner in both recovery and prevention when major disasters occur.
