Baden-Baden: Swiss Re warns of $300bn cat year as geopolitical and civil unrest risks rise

Swiss Re has warned that the global insurance market could soon face its first $300bn year of insured catastrophe losses, as extreme weather, urban exposures and social instability combine to strain reinsurers’ balance sheets.

Leopoldo Camara, Swiss Re’s head of property and casualty reinsurance for northern, central and eastern Europe, said 2025 was set to be the fifth consecutive year of catastrophe losses reaching more than $100bn.

“It is not inconceivable to see a $300bn year in the next few years,” he said. “We attach a high probability to that happening within the next 10 years.”

Camara warned that the frequency and intensity of extreme weather events were increasing, often in concentrated regions.

He cited the record-setting Los Angeles wildfires earlier this year, alongside European flooding, UAE flash floods and Turkey’s earthquake, as evidence of a “new normal” of clustered catastrophe events.

The reinsurer noted $6.4bn of inmsured losses from the Turkey earthquakes in 2023, another $3bn from the UAE floods, $2.7bn from 2024’s Storm Boris in central and eastern Europe, $1.7bn from German floods the same year, the $40bn estimated insured losses from this year’s Los Angeles wildfires, plus $0.4bn from severe landslides in Switzerland in 2025.

“Large events have this annoying feature that they never follow the way we describe them in policies,” he said.

“Good definitions are required for risk management and risk transfer,” Camara added.

Geopolitical and social instability

Swiss Re led its briefing with a warning about heightened geopolitical tensions, shifting alliances and protectionist trade policies as drivers of volatility.

Camara said such instability was now being mirrored by a surge in strike, riot and civil commotion (SRCC) claims across Europe, with incidents reported in 25 countries so far this year.

Half of young adults are, according to various recent surveys, supportive of hostile activism to achieve political change, the reinsurer warned.

“Combinations of social dissatisfaction, radical political views and outright provocation create instability,” he said.

“The term ‘hostile activism’ is finding surprising degrees of support in societies,” he added.

He noted that arson has been suspected as a contributing factor in the recent Pacific Palisades wildfire in California, illustrating how social unrest can amplify and complicate natural catastrophe losses.

“This incident shows that sometimes SRCC and nat cat are connected,” Camara said. “It also shows how difficult it is to define events.”

Secondary perils become primary

Camara said Europe’s cat risk profile had shifted, with floods, convective storms and other so-called “secondary perils” now accounting for more than 90% of cat losses on the continent.

He warned that higher temperatures were driving greater humidity and rainfall intensity, increasing flood exposure across densely populated regions.

“Europe is a hotspot for floods,” he said. “A fifth of the European population is exposed to natural catastrophes, and the highest proportion to floods.”

Camara added that hurricanes crossing the Atlantic and making landfall in Europe — such as Amy, which recently struck the Nordics — represented another emerging pattern, while severe convective storms were occurring with shorter run periods and cumulative strain.

He urged a more collective approach to managing these “externalities” of extreme weather.

“Negotiating renewals one by one is not the ideal approach,” he said. “A much more effective way is pooling together — involving governments, emergency services and better building codes — alongside insurance and reinsurance.”

Long-tail and liability challenges

Nikhil da Victoria Lobo, head of property and casualty reinsurance for western and southern Europe and the Middle East and Africa, spoke next.

He said that Swiss Re was monitoring liability risks linked to new European legislation and proposed EU class-action laws and consumer protection directives that could heighten volatility in casualty lines.

Inflation is adding to uncertainty to long-tail exposures, he observed.

“These are long-term effects that will impact not only the insurance sector but the general economy,” he said.

Da Victoria Lobo added that heatwaves and wildfires were becoming systemic risks across southern Europe, with significant implications for energy, infrastructure and public health.

“We’re still starting to understand the long-term implications,” he said. “But this is very much on the radar.”

He said reinsurance remained the essential “shock absorber” for these converging trends, and that Baden-Baden discussions would focus on maintaining stability amid persistent risk inflation.

“This is a moment where our industry gets to step up and really demonstrate our value proposition,” he said. “Bringing better data, technology and tailored solutions to clients, and partnering across public and private sectors, is central to that mission.”