Climate Risk Pushes Reinsurers to Raise Global Premiums
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The global reinsurance industry is increasing premiums at an accelerated pace as climate change-related risks—such as hurricanes, floods, and wildfires—continue to drive unprecedented losses, forcing insurers to recalibrate their risk models and capital requirements.
According to the latest report from the Reinsurance Market Monitor, worldwide reinsurance premiums rose by an average of 15% in the first half of 2025, marking the steepest increase since 2010. Property and casualty segments have been most affected, with some specialty coverage lines seeing hikes above 20%.
“The frequency and severity of natural disasters are forcing reinsurers to pass costs onto clients to maintain solvency and profitability,” said Miriam Goldstein, chief risk officer at GlobalRe. “This is a global phenomenon impacting markets from North America to Asia-Pacific.”
Losses from weather-related events in 2024 totaled an estimated $110 billion, according to Munich Re’s annual report, representing a 25% increase over the previous year. High-profile disasters such as Hurricane Zelda in the US Southeast and extensive flooding in Southeast Asia have contributed significantly to these figures.
Reinsurers including Swiss Re, Munich Re, and Hannover Re have all announced renewed pricing discipline, tightening coverage terms and lowering capacity in high-risk regions. This has translated to increased premiums for primary insurers, which in turn may affect policyholders across industries and geographies.
In response, companies are exploring alternative risk transfer solutions such as catastrophe bonds and insurance-linked securities (ILS), which allow investors to assume some climate-related risks in exchange for higher yields.
Regulatory bodies are also adapting. The International Association of Insurance Supervisors (IAIS) is developing new guidelines for climate risk reporting and stress testing, emphasizing transparency and resilience.
The rising cost of reinsurance is expected to influence broader economic sectors, including real estate development, agriculture, and infrastructure. Developers in hurricane-prone coastal zones are facing higher insurance expenses, while farmers contend with reduced coverage availability.
Industry analysts warn that if climate risks continue to escalate without corresponding mitigation efforts, premiums may rise further, potentially limiting insurance affordability and accessibility.
Some reinsurers are investing heavily in advanced analytics and climate modeling to better anticipate risk patterns. These technologies aim to improve underwriting precision and support innovative product offerings tailored to evolving environmental challenges.
Ultimately, the intersection of climate risk and financial markets is reshaping the insurance landscape, demanding coordinated action from insurers, regulators, governments, and investors alike.
