Reinsurance Sector Faces Challenges as Climate Change and Urbanization Drive $350 Billion in Losses

Kathmandu – A recent study has revealed that climate change and uncontrolled urban activities resulted in approximately $310 billion in economic losses worldwide in 2024, significantly impacting the global insurance sector. The increasing frequency and severity of natural disasters such as fires, floods, landslides, and storms have placed immense financial pressure on insurance companies.

The study, conducted by Swiss Re, the world’s oldest reinsurance company, indicates that insurance losses increased by 6 percent in 2024 compared to 2023 due to the climate crisis. The report warns that if the current trend continues, insurance claims will rise further, making it increasingly difficult for companies to meet their obligations.

According to Swiss Re, overall insurance losses worldwide have exceeded $100 billion for the fifth consecutive year. Since the onset of the COVID-19 pandemic in 2019, insurance companies have faced substantial losses each year.

The rise in losses has been attributed to multiple factors, including increasing property values, economic expansion in urban areas, and rising reconstruction costs. Climate change has further exacerbated the situation by intensifying extreme weather events, leading to higher claims.

Swiss Re has cautioned that the risk of insured property losses will continue to grow due to the combined effects of climate change and unchecked urban sprawl. The company has emphasized the need for immediate and effective adaptation measures, such as the construction of dams, flood control gates, and structural reinforcements, to mitigate the impact of extreme disasters.