Back

Insurance and catastrophe

GRA · PAGE · insurance-catastropheGRA dossier · service level R0
GRAFinancial-system risk
Financial-system risk · Insurance and catastrophe

Insurance and catastrophe

Insurance is how much of the real economy's catastrophe risk is shared, and reinsurance is how insurers share it in turn. When catastrophe losses rise, the effects travel: claims and reinsurance costs increase, cover is repriced or withdrawn, and the uninsured share returns to households, firms, lenders and governments. The Global Risks Alliance (GRA) examines protection gaps, insurance loss and reinsurance dependencies as shared industry questions. It never underwrites, places or prices cover. See Financial-system risk.

01In brief

The short answer.

Insurance and catastrophe risk is how the real economy's catastrophe losses are shared through insurance and, in turn, reinsurance, and what happens when losses rise: claims and reinsurance costs increase, cover is repriced or withdrawn, and the uninsured share returns to households, firms, lenders and governments. GRA examines protection gaps and reinsurance dependence.

02Spatial finance

Exposure, hazard and the exceedance curve.

Which places drive loss in a severe year, and how far it reaches into reinsurance. Illustrative design values.

Coastal exposure under cyclone and earthquake zones, beside the loss curve it produces.Illustrative design values, not a model output or a price.
03Transmission

How catastrophe risk moves through insurance.

ChannelHow the shock reaches finance
Catastrophe claimsLarge events produce concentrated losses across many policies at once
Reinsurance dependencyInsurers rely on a concentrated reinsurance market, whose capacity and cost move after major events
Withdrawal of coverRising losses lead to repricing or exit, enlarging protection gaps
Credit spilloverUninsured damage reaches mortgage, business and infrastructure lending
Fiscal spilloverGovernments absorb uninsured public and private losses

Channels describe mechanisms, not measured strengths or probabilities.

04Supervisory frame

Capital, accounting and climate in insurance.

InstrumentStatus, October 2026What it asks of catastrophe risk
Insurance Capital StandardAdopted by the IAIS December 2024 for internationally active insurance groups; baseline implementation self-assessment in 2026A group prescribed capital requirement including natural catastrophe risk
IAIS Application Paper on climate-related risksPublished April 2025, replacing the 2021 paperGovernance, ORSA scenario analysis, valuation, disclosure and conduct applied to climate risk
Solvency II, as amended by the 2025 reviewAmendments apply from 30 January 2027The one-in-two-hundred year standard, with climate scenario analysis added to the ORSA under the review
IFRS 17 Insurance ContractsEffective since 1 January 2023How catastrophe-exposed contracts are measured, including the risk adjustment
05Method

The exceedance curve, and where it comes from.

Catastrophe risk is read from an exceedance probability curve: the probability that annual loss exceeds each amount. It is built from four modules: a stochastic event set, a hazard footprint per event, a vulnerability function per building class and a financial module that applies deductibles, limits and reinsurance. The 1-in-200 point on the curve drives Solvency II capital; the 1-in-100 and 1-in-250 points frame reinsurance purchases.

Each module has a different owner and a different uncertainty. Hazard science sits at GCRI flood and storm; open modelling frameworks such as Oasis make the modules inspectable. Specialist work continues at Reinsurance and Catastrophe.

06Questions

Shared questions GRA works on.

  1. 01

    Protection-gap evidence

    What is uninsured, why, and how reliable are the estimates?

  2. 02

    Model differences

    How should differences between catastrophe models be shown, rather than averaged away?

  3. 03

    Accumulation

    Where can one event, or a compound sequence, drive correlated losses across insurers?

  4. 04

    Insurance and credit links

    What happens to lending when cover for collateral is withdrawn?

07Boundary

Market questions stay with the market.

  • GRA never sets, suggests or discusses premiums, rates, capacity or coverage terms.
  • It does not sell, solicit, negotiate, place or broker cover, and recommends no insurer or reinsurer.
  • No collective commitment on which risks, regions or clients to insure is discussed or agreed.
  • Readiness work: Insurance readiness and Protection gaps.
08Connected

The same subject across the Consortium.

GRA platforms

Insurance and reinsurance

Insurance Nexus, established, and Reinsurance and Catastrophe, in development.

Science

Hazards and disaster resilience

Evidence from The Global Centre for Risk and Innovation (GCRI): Disaster Resilience.

Governance

Disaster and crisis governance

Dialogue convened by The Global Risks Forum (GRF): Disaster and Crisis Governance.

09Key terms

Terms used on this page.

Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.

TermDefinition
Catastrophe modelSoftware that combines hazard, exposure and vulnerability modules to simulate many possible events and estimate the distribution of insured loss.
ReinsuranceInsurance bought by insurers to transfer part of their risk to another carrier, limiting the effect of large or accumulated losses on their capital.
Insurance protection gapThe difference between economic losses and insured losses, for an event, a year or an expected annual figure.
Probable maximum lossThe loss a portfolio could suffer at a stated return period or exceedance probability, used to size reinsurance and capital.
11Questions

Questions and answers.

Does GRA publish protection-gap estimates?
Only with a dated, sourced record, its evidence label and its method. A modelled figure is never presented as observed, and missing data is shown as missing.
Can insurers coordinate on capacity through GRA?
No. Capacity, pricing and coverage terms are never discussed, under safeguards set out in a written competition policy that counsel reviews before membership opens.
Is GRA an insurance intermediary?
No. GRA is not an insurer, reinsurer or insurance intermediary, and takes no pay tied to any transaction.
Why does reinsurance dependency matter beyond insurers?
Because primary insurers price and offer cover partly on the reinsurance they can buy. When reinsurance capacity tightens after major events, primary cover can be repriced or withdrawn, and the uninsured share moves back to households, lenders and public budgets.
The Global Risks Alliance

Start with an enquiry.

The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.