S&P Global Market Intelligence has released a report today showing how evolving natural catastrophe risks due to climate change are forcing insurers to reevaluate their relationships with each other and the world at large. The newly published Evolving Natural Catastrophe Risks report is part of S&P Global Market Intelligence’s Big Picture 2025 Outlook Report Series.
Highlights from the report include:
Secondary perils such as floods and fires played a large role in the global reinsurance industry failing to earn its cost of capital for five of the six years between 2017 and 2022. The knock-on effect of this new reality has insurers paying more for cover to the reinsurance industry and retaining more risk on their own books.
One striking example of how the risk landscape has changed is the damage wrought by Hurricane Helene in North Carolina. Hurricanes generally cause the most destruction in coastal regions but in this case the Appalachian Mountains saw some of the most severe devastation from the storm. However, a significant portion of the economic losses caused by Helene are not insured, as flooding falls outside the terms and conditions of most insurance policies in the U.S.
It has been a costly 2024 so far for European-focused insurers after two large floods hit the central and eastern parts of the continent. S&P Global Sustainable1 data shows that the northernmost part of Germany will be particularly susceptible to increased pluvial flooding in the 2050s.
These findings highlight the necessity for robust infrastructure design and prioritizing flood-resistant construction. As drought, water stress and localized flooding risks intensify, strategic planning and proactive risk management will be vital to safeguard against evolving climate challenges.
