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Swiss Re: Weather-related losses to increase up to 120% by 2040

Jerome Jean Haegeli

Weather-related insured losses are set to increase by 90%-120% by 2040, driven mostly by climate change, economic development and urbanisation, according to Swiss Re.

More than 75% of natural catastrophe losses are also currently unprotected, but Swiss Re’s group chief economist Jerome Jean Haegeli said he hoped this figure would decrease in the future.

However, the insurance industry is “part of the solution” to the climate crisis, Haegeli emphasised during a media briefing this morning.

“Our insurance industry is part of the solution through the knowledge we have in terms of natural catastrophes, and through the underwriting knowledge in terms of pricing and transforming risk,” he explained.

Haegeli noted that property would be the engine of growth for the insurance industry in the near future, along with motor business.

He also said claims inflation was “something we cannot and should not expect just to go away” in 2022, adding that inflationary pressure on the consumer price index was expected to keep claims inflation high for some time.

Haegeli listed three forces affecting the industry’s profitability at present: inflation, market growth and pricing.

He predicted profitability would improve going into 2022, as he said he expected market hardening to continue.

“Even if you have higher claims inflation, you see high insurance market prices, which are actually broadening across commercial lines.”

Haegeli said bottom-line inflationary claims were “definitely something to watch out for and something to reserve for”.

But he added that, while this would be a “drag” for insurance market profitability, it would also lift pricing, which is “very, very positive”.

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