Munich Re: the reinsurance market unable to absorb the systemic risk of climate change

Munich Re has pointed out that the reinsurance market alone is incapable of absorbing the systemic risk caused by climate change. Public-private partnerships and government interventions are needed to address this large-scale problem.

In addition to global warming, significant demographic and economic changes in high-risk areas are increasingly exposing insurers to major catastrophes and secondary perils.

According to the investment bank Peel Hunt, the track record in some years shows that losses from secondary risks exceed those from major events. In such an environment, some underwriters would be forced to reduce their coverage at the January 2022 renewal or increase rates.