A new report by the International Association of Insurance Supervisors (IAIS) examines the potential financial stability implications of natural catastrophe insurance protection gaps.
The 76-page special topic edition of Global Insurance Market Report (GIMAR) published by IAIS in November 2025 underscores the critical role of insurance in mitigating economic and societal impacts of Nat CAT events.
The new report draws on six detailed case studies, including historical events and forward-looking scenarios, to illustrate the diverse impacts of Nat CAT events on the real economy, financial sector and society.
The report reveals that significant portions of economic losses remain uninsured – particularly in emerging markets and developing economy (EMDE) jurisdictions – potentially exposing economies to greater risks and challenging financial systems.
It says the widening protection gaps could increase financial stability risks, for instance by shifting more risks to the banking sector. It also assesses the key drivers, trends and impacts of these gaps and emphasises the importance of coordinated global action.
IAIS Executive Committee Chair, Shigeru Ariizumi said, “Natural catastrophe events are becoming more frequent and severe, with significant portions of economic losses remaining uninsured. This report underscores the critical role of insurance in mitigating these impacts while highlighting the urgent need to address insurance protection gaps to safeguard financial stability.”
The report highlights several key findings:
Protection gaps remain significant worldwide: Nat CAT events can have significant economic and societal impacts, disrupting the real economy, financial systems and social structures through both direct damage and broader indirect consequences.
Economic and societal impacts are wide-ranging: The case studies reveal that Nat CAT events may disrupt critical sectors such as agriculture, housing and infrastructure, causing cascading effects on employment, income and public finances. Vulnerable groups face additional challenges, including displacement, poverty and slower recovery, further intensifying inequalities.
Insurance mechanisms are vital but uneven: Insurance payouts, reinsurance and government-backed schemes help reduce financial impacts in some cases, but their availability varies significantly across jurisdictions. This uneven access raises concerns, particularly as Nat CAT events become more frequent and severe. A further reduction of insurance coverage in the future could increase systemic risks.
IAIS secretary general Jonathan Dixon said, “These findings highlight the profound implications of insurance protection gaps for economies, societies and financial systems. Without coordinated global action, these gaps could evolve into systemic vulnerabilities, potentially threatening financial stability in the most exposed regions.”
The IAIS has made substantial progress in elevating this conversation on the global policy agenda, bringing together insurance supervisors, the insurance industry and policymakers to highlight the role of insurance in tackling Nat CAT protection gaps.
The IAIS press release said, “The IAIS with its members, will continue efforts to assess and address Nat CAT protection gaps and collaborate with partners to foster resilience to future risks. Key priorities for future work include advancing data collection efforts, promoting global collaboration and offering practical guidance and knowledge sharing for policymakers and supervisors.”