As the reinsurance market enters the upcoming renewal season against the backdrop of an increasingly interconnected and rapidly changing risk landscape, clients need support in in identifying evolving exposures and risk accumulations through data and analytics, underwriting expertise and tailored solutions to manage this complex environment.
“The underlying need for protection continues to grow as the risk landscape evolves and becomes more interconnected,” said Swiss Re CEO P&C Reinsurance Urs Baertschi in a statement from the reinsurer.
Mr Baertschi also mentioned taut clients need more than reinsurance capacity: they need risk expertise, data and solutions that help them navigate an increasingly complex environment, as well as understand emerging exposures, manage volatility and build resilience.
Growing Nat CAT risk
Nat CAT risk remains a significant driver of reinsurance demand, with Insured Nat CAT losses following a 5% to 7% annual growth rate, driven by increasing exposures, rising asset values and changing hazard patterns.
The statement also noted that Swiss Re’s modelling indicates that insured losses could reach around $320bn in a 2026 peak loss scenario, illustrating the value of reinsurance protection against low-frequency, high-severity events.
For instance, a cluster of hurricanes can push annual insured losses above $120bn, even without a single record-breaking event.
Wildfire is the fastest-growing weather peril globally, where insured wildfire losses have increased by an estimated 8% to 11% annually over recent decades. Exposure continues to rise as more people and assets are located in wildfire-prone areas.
Better data, modelling, prevention and adaptation can improve understanding of these changing risks and support more effective risk transfer.
AI infrastructure creates opportunities for risk transfer
Cumulative investment in data centres is projected to exceed $6tn by 2030, with Swiss Re Institute estimating a related global insurance premium opportunity of $91bn by the end of the decade.
According to Swiss Re Institute, around 40% of US data centre capacity is located in significant-to-very-high tornado day zones. As data centres grow in size and relevance, their risk profile is also becoming more complex. High asset values combined with dependencies on electricity grids, water, technology supply chains and digital infrastructure create potential concentrations across individual sites and wider networks.
Geopolitical uncertainty amplifies risks
Geopolitical tensions are adding uncertainty to the risk landscape, as disruption to global value chains can create recurring shocks to energy, commodities and supply chains, adding to inflationary pressure.
For (re)insurers, this can translate into higher repair and replacement costs and ultimately higher claims costs. As such, Swiss Re noted in its statement that understanding the knock-on impacts and potential concentrations is increasingly important to strengthening resilience.
Swiss Re CUO P&C Reinsurance Gianfranco Lot said, “As risks become more complex, underwriting increasingly depends on understanding how exposures interact and where concentrations can develop.”