Part of a new industry series Insuring the Future™: Climate Risk Intelligence™ for Insurance Services
Executive Summary
Insurance risk is being reshaped by two forces moving in parallel: rising catastrophe losses and shifting hazard statistics. In the United States, billion-dollar disasters are occurring more frequently, and globally, insured losses have remained above USD 100 billion for multiple consecutive years while a large share of economic losses remains uninsured. At the same time, climate science indicates that warming is changing the frequency and intensity of extremes such as heavy precipitation. The practical implication is that relying primarily on recent historical loss experience can systematically understate future risk. Insurers must balance solvency and affordability while hazard patterns evolve over the lifetimes of policies, assets, and portfolios, which increases the need for robust Climate Risk Intelligence.
U.S. Loss Frequency And Severity Are Rising
The statistics of loss are changing. In the United States, 2023 set a new record with 28 separate weather and climate disasters each exceeding USD 1 billion in damages, surpassing the previous record of 22 events in 2020 (National Centers for Environmental Information [NCEI], 2024). From 1980 to 2024, the country experienced 403 such billion dollar events, with cumulative losses in the multiple trillions of dollars (NCEI, 2025). In 2024, there were 27 billion dollar disasters, trailing only the record set in 2023 (Climate.gov, 2025).
Global Losses And The Protection Gap Are Widening
Globally, 2023 saw 142 natural catastrophe events with insured losses of about USD 108 billion, the fourth consecutive year in which insured natural catastrophe losses exceeded USD 100 billion (Swiss Re Institute, 2024). Only about 38–40 percent of the USD 280 billion in economic losses were insured, leaving a very large protection gap (Swiss Re Institute, 2024). In 2024, global economic losses reached around USD 318 billion, of which USD 137 billion, or 43 percent, were insured (Swiss Re, 2025; Swiss Re Institute, 2025). The remainder fell on households, firms, and governments.
Hazard Statistics Are Shifting Under Warming
Climate science has become clearer at the same time. The Intergovernmental Panel on Climate Change’s Sixth Assessment Report concludes that heavy precipitation events have likely increased in frequency and intensity in many regions due to human driven warming (IPCC, 2021). At about 4 degrees Celsius of global warming, global average 10 year heavy precipitation events are projected to occur roughly twice as often, and 50 year events about three times as often, compared with the 1850–1900 baseline climate (IPCC, 2021). Similar shifts are expected for some heatwaves, droughts, and tropical cyclone characteristics.
Implications For Insurance Models, Solvency, And Affordability
For insurers, this combination of rising losses and changing hazard statistics means that loss experience from the past 20 to 30 years reflects a cooler, less volatile climate and different patterns of exposure. If models and pricing rely only on that history, they may systematically under estimate future risk. The challenge is to maintain solvency and affordability today while adapting to hazard patterns that are shifting over the lifetimes of policies, assets, and portfolios—a challenge that demands robust Climate Risk Intelligence™.
Frequently Asked Questions (FAQs)
- Why are weather and climate losses increasing so rapidly? Losses are rising due to a combination of more frequent and severe climate-driven hazards, growing exposure in high-risk areas, higher asset values, and increased vulnerability of infrastructure and communities.
- What is the insurance “protection gap”? The protection gap refers to the share of economic losses from natural catastrophes that are not covered by insurance and instead fall on households, businesses, and governments.
- How does climate change affect traditional insurance models? Traditional models rely heavily on historical loss data. As hazard frequencies and intensities shift under a warming climate, those historical records may no longer represent future risk accurately.
- Why is Climate Risk Intelligence™ important for insurers? Climate Risk Intelligence™ integrates forward-looking climate science with hazard, exposure, vulnerability, and financial data to support underwriting, pricing, reinsurance, and capital planning in a changing risk environment.
- How can insurers balance solvency and affordability as risks evolve? Insurers can balance solvency and affordability by updating risk models with forward-looking climate data, improving portfolio diversification, strengthening reinsurance strategies, and using Climate Risk Intelligence™ to guide proactive risk management and resilience investments.
More in the next post on Insuring the Future™: Climate Risk Intelligence™ for Insurance Services…
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