A new report from Swiss Re has suggested that the rising value of natural catastrophe-exposed assets, and the resulting increase in the absolute protection gap, continues to pose resilience risks, even though insurance cover has broadly kept pace with rapidly growing exposures, highlighting the need for targeted adaptation projects that reduce expected losses, lower physical vulnerability, support insurability and improve the economics of risk transfer.
According to the reinsurer’s new report, the global natural catastrophe protection gap reached $424 billion in 2025, up from $395 billion a year earlier.
Still, the proportion of protection needed that is covered by insurance was broadly unchanged from 2024, with the firm’s resilience index at 27.3%.
“Our Natural Catastrophe Insurance Resilience Index is a measure of insurance coverage that estimates the degree to which available private insurance protection covers the protection needed, based on modelled expected losses. The protection gap is measured in premium-equivalent terms: it represents the difference between insurance premiums currently written and those required to fully cover expected economic losses. We model expected losses for all primary and most secondary perils, excluding wildfire due to data limitations,” Swiss Re explained.
Swiss Re said its resilience index improved by two percentage points over the past decade, from 25.3% in 2015.
Meanwhile, both protection needed and protection available have risen, with the latter increasing at a slightly faster pace due to rising insurance penetration.
“Yet, in absolute terms, the protection gap continues to grow, as there is simply more to protect,” the reinsurer added.
At the same time, Swiss Re observed that, if the long-term 5–7% annual real-term growth trend in insured losses persists, global insured losses could reach $186 billion by 2030.
Against this backdrop, the firm stressed that strengthening resilience and narrowing the natural catastrophe protection gap will require both expanding insurance coverage to transfer more risk and reducing expected economic losses.
Swiss Re continued, “Targeted adaptation can reduce expected losses and help to improve the conditions for insurance availability and insurability. It can lower physical vulnerability and help to reduce the risk that catastrophic risks become uninsurable over time.
“For example, in western/central Europe, sigma analysis suggests that flood protection and adaptation measures, such as dikes, levees and land-use planning, have contributed to constraining insured loss growth, particularly for countries such as the UK, France, Switzerland, and Austria.”
The reinsurer concluded, “The right mix of adaptation measures, clearer appraisal standards, and market incentives that reward risk reduction, may support further improvement in the global insurance coverage (resilience index) ratios even as exposure rises.
“An integrated approach that combines insurance coverage with risk-adaptation measures in exposed areas, can narrow natural catastrophe protection gaps.”
