Three major risks facing the insurance and reinsurance sector

The global insurance and reinsurance market has been confronted with multiple crises for years, most of which are the result of three major risks: climate change, geopolitical risk and cyber attacks.

Climate change is considered to be the main risk currently affecting the industry. According to Swiss Re, insured losses caused by natural catastrophes exceeded the 100 billion USD mark in 2023 for the fourth year running. More than 50% of these losses were due to secondary perils such as flooding, hail and fire.

Global warming has several consequences, including soaring repair and construction costs and tighter reinsurance conditions.

Insurers and reinsurers are also faced with a geopolitical crisis. In 2022, 60% of the world's countries were subject to financial sanctions affecting the insurance industry.

These geopolitical risks have an economic impact on the sector at a global level. For its part, political violence has led to an increase in insured losses resulting from strikes, riots and civil unrest.

The third challenge facing the industry is technology-related. Introducing artificial intelligence (AI) into the insurance sector could boost productivity, but it could also give rise to new risks in the production chain. In addition, demand for coverage against cyber-attacks remains rather limited, despite the growing number and scale of hacking attacks.

The above information was provided by Gianfranco Lot, Chief Non-Life Underwriting Officer at Swiss Re.