As risks are becoming more global and volatile, the value of reinsurance has never been more evident than it is today, according to a new report by the global reinsurer Munich Re.
In 2025, global insured losses passed the $100bn mark for the sixth consecutive year, with non-peak perils events that fall short of the most severe natural disasters, such as hailstorms now exceeding the $100bn mark per year, following years of upward growth. Munich Re said that non-peak perils that were long regarded as events involving comparatively low losses overall, they have now begun to add up to loss levels that were previously associated primarily with major events. This trend is progressively becoming the new normal.
Non peak perils increasing
The report said that heat claims are also on the increase and have claimed a growing number of lives in recent months. Furthermore, exceptionally high temperatures, as well as floods and other non-peak perils, are having a significant impact on infrastructure and, consequently, on supply chains. They also cause considerable damage to agriculture, healthcare systems, and to buildings and technical installations. Consequently, such natural hazards are shifting more and more from being primarily ecological risks to economic risks, even though it is not always easy to establish a causal link in the case of heat-related damage.
AI and cyber risks changing insurance landscape
The growing use of AI and the threats posed by cyber risks are fundamentally changing the risk landscape. Although cyber risks currently present one of the greatest business risks, uptake of cyber insurance remains low.
The increasing professionalism of attackers, coupled with a risk landscape which is becoming ever more complex due to artificial intelligence, geopolitical tensions and systemic interdependencies, is driving up the costs of cyber-crime even further. Studies by Munich Re show that 89% of companies say they do not feel adequately protected against this. The complexity of these risks calls for independent and innovative modelling, as well as specialist AI expertise, which Munich Re is able to offer its clients.
Reinsurer’s role critical
In the current situation, reinsurers play a key role in helping better understand and assess changing risks. Furthermore, they can help with prevention and resilience, and cushion claims burdens. They thus make a pivotal contribution to economic stability and to the insurability of new and existing risks.
Munich Re member of the board of management Thomas Blunck said that the value of reinsurance has never been more evident than it is today and that a resilient reinsurance sector is capable of absorbing increasingly complex and globally interconnected risks. “Offering reliable capacity underpinned by our exceptional financial strength, outstanding expertise and innovative solutions, we create stability, facilitate investment and support recovery following major loss events. These criteria are crucial to long-term economic resilience and the insurability of risks," he said.
Reinsurance as society’s immune system
At present, the market environment is facing an abundance of uncertainties: The consequences of climate change, geopolitical tensions and rapid technological development are all occurring simultaneously and intensifying one another. It is at times like these that Munich Re’s great strength as a reliable partner for its clients and as an immune system for society as a whole becomes apparent. Insurance protects people, mitigates financial losses and enables progress. Just as the immune system protects the body from life-threatening illnesses, insurance protects people and businesses from losses that could threaten their very existence.
Steadily increasing reinsurance capital: a reliable source of capital
Reinsurance capital is growing at a rate of +5.8% per annum over the past eight years, and the insurance sector has proved to be a reliable source of capital for its clients. Munich Re said its long-term partnerships and focus on client needs are part of its Ambition 2030 corporate strategy. The company also reported a Net Promoter Score of 70 among surveyed clients, who credited Munich Re with expertise, reliability and a strong understanding of their businesses.