Reinsurers’ capitalization may not be enough to cover peak losses
The global reinsurance market capitalization of $500 billion is sufficient for average annual natural catastrophe losses. But this amount of reinsurance capital may not be enough to cover peak losses due to hurricanes, earthquakes or forest fires.
The UkrStrakhuvannya online resource learned about this from a report by the analytical service of the Swiss insurance group Swiss Re Institute.
Natural catastrophe losses are expected to amount to $145 billion in 2025, including $40 billion in losses due to forest fires in California.
“When a major hurricane or major earthquake strikes a densely populated urban area, insured losses this year can be more than double the long-term trend in losses,” the report says.
Recall that the new norm for annual insured losses due to natural catastrophes may be a value threshold of $150 billion with an annual growth of 5-7%. In the first quarter, natural catastrophes caused losses to the global insurance industry in the amount of $53 billion.