How can APAC insurers close the gap on climate risk readiness?

Physical climate risk is now seen as a wider financial threat beyond underwriting.

Asia-Pacific (APAC) insurers face mounting pressure to boost underwriting and risk planning as extreme weather drives insured losses higher and leaves large parts of the region exposed.

Climate-driven physical risk is no longer seen as a narrow underwriting issue but as a broader financial risk, according to a survey by MSCI, Inc. of 50 of the world’s biggest property and casualty insurers and reinsurers.

Many respondents said they were prepared individually, but few thought the industry as a whole was ready. That view was shared by half of insurers in the APAC region, compared with 62% in North America and 46% in Europe.

Concern about systemic impact was even higher. All surveyed APAC insurers reported moderate to very high concern over physical risks affecting financial systems, above the global average of 88%.

Despite this concern, integration remains limited. In the APAC region, 64% expressed high concern about physical climate risk, yet 63% said they remain at early or intermediate stages of embedding it into underwriting, risk oversight and capital frameworks.

Loss trends underline the urgency. Swiss Reinsurance Co. Ltd. said global insured losses from natural catastrophes reached $107b in 2025. Secondary perils, including floods, storms, and wildfires, accounted for 92% of that total.

Economic losses stood at $220b, with about 49% insured, the highest share on record. Protection gaps remain wide, particularly in emerging markets where 80% to 90% of catastrophe losses are typically uninsured.

Swiss Re said insured losses are expected to keep rising due to population growth, rising asset values and higher rebuilding costs.

Long-term insured losses have been expanding at about 5% to 7% a year. In a peak-loss scenario, they could reach $320b as early as this year.

Responses differ by region. In Europe, 68% of insurers said physical risk is integrated into overall risk management, compared with 36% in the  APAC region and about one-third in North America.

About 79% of European insurers said underwriting is well prepared for rising physical risk, versus 23% in APAC region.

Regulators are stepping up scrutiny, placing greater emphasis on board oversight, risk controls, and the quality of climate‑related disclosures.

However, there is a clear gap between what insurers say about climate risk and how they hold leaders accountable for it. Most have not tied those climate goals to executive pay or performance reviews—the mechanisms that actually influence decision‑making at the top.

Questions to ponder:

• How can insurers move from concern to full integration of physical climate risk?
• How can insurers keep cover affordable whilst pricing climate risk accurately?