Insured losses to surpass $200b in 2025 as risks escalate: Geneva Association

The institutions also emphasised how P&C re/insurance can help mitigate challenges.

Globally insured losses from hurricanes, floods, wildfires, and severe storms have exceeded $100b annually since 2020 and are expected to surpass $200b in 2025, according to the Geneva Association’s report.

These losses are not only driven by climate-related hazards but also by human decisions that increase exposure and vulnerability, the report “Safeguarding Home Insurance: Reducing exposure and vulnerability to extreme weather” showed.

Rising costs of rebuilding, driven by inflation, supply chain issues, and labour shortages, are further compounding the impact.

The report highlights a widening “protection gap” — the portion of total economic losses that remains uninsured — with Asia having one of the highest gaps. 

Factors behind this gap  include low risk awareness, reliance on post-disaster aid, and lack of financial literacy.

Insurance, particularly property and casualty (P&C) re/insurance, plays a key role in mitigating the financial effects of extreme weather. 

The report examines housing sector challenges in advanced economies, including Australia, Canada, the European Union, Japan, and the United States. 

In Australia, 15% of properties are considered under affordability stress.

Homeowners, developers, and local governments all contribute to growing exposure through decisions such as prioritising housing affordability over risk, approving construction in hazard-prone areas, and overlooking weather-related factors in property valuation and mortgage processes. 

Financial systems often fail to account for rebuilding costs and insurance availability when assessing loans, enabling purchases in high-risk regions.

To address these issues, the report proposes a two-tier strategy. 
The first tier focuses on scaling existing local resilience efforts such as enforcing risk-based zoning and modern building codes, implementing buyout and relocation schemes, and promoting nature-based solutions. 

Examples include Japan’s disaster risk zones, Australia’s buy-back programme, and infrastructure projects in the Netherlands and Japan.

The second tier calls for structural changes to financial systems. These include integrating insured values and risk data into property valuations, making insurance requirements part of mortgage approvals, and using forward-looking risk assessments. 

It also recommends mandatory hazard disclosures and monitoring of insurance coverage to avoid delinquencies.