More capital alone won’t keep growing risks insurable; stronger mitigation needed, Swiss Re says

Growing risk concentration and interconnected supply chains are making losses harder to contain and faster to spread, says Swiss Re's Camara.

Key points:
Risk concentration is rising
More reinsurance will be needed
Mitigation critical to insurability

Risk is growing, concentrating and becoming more interconnected. More insurance capital will be needed to keep risk insurable, but capital alone will not be enough.

That is the tension Swiss Re’s Leopoldo Camara sees facing the European market as insurers and reinsurers head into this year’s Baden-Baden, where the market begins staking out its positions for the January renewals.

Larger individual risks, greater geographic clustering, increasingly intertwined supply chains and shared physical and digital networks are changing where losses can build and how quickly they can spread.

“In a way, systemic risk is becoming more systemic,” Camara, head of Northern, Central and Eastern Europe P&C Re at Swiss Re, told Baden-Baden Today. Click here to watch the full interview.

“Primary insurers and reinsurers are dealing with larger individual risks. Data centres are one example that everybody talks about, although certainly not the only one. We also see greater geographic clustering and that is an issue that keeps growing year on year.”

Demand for reinsurance is rising alongside those exposures, while supply is also increasing. “There is an increase in the amount of capacity available to the market, which in our view is positive because we need more capital to cover the risk,” he said.

But risk transfer is only part of the answer.

“We need an ecosystem of risk management that goes beyond the sheer risk transfer aspect of it,” Camara said. “Risk transfer is obviously the primary topic in Baden-Baden, but during the rest of the year we should be talking about these other elements systematically, broadly and everywhere.”

Losses build quickly

Secondary perils accounted for 65% of insured nat cat losses in Europe in 2025, according to Swiss Re Institute. Severe convective storms were the largest contributor, generating around $1.5 billion, or 36% of European insured nat cat losses.

The pattern has continued into 2026. July storms affecting France, Germany, northern Italy and Switzerland generated an initial €2.2 billion insured loss estimate, according to PERILS, while a further outbreak in August caused approximately €2.5 billion of insured losses, according to Gallagher, much of it in motor.

In Switzerland, insured losses from the August hail and storm event are expected to exceed CHF 1.7 billion, around half of which relates to motor, according to the Swiss Insurance Association and the Swiss Cantonal Building Insurers.

Camara said the speed of the Swiss event was as significant as its eventual cost.

“The recent event in Switzerland did not last longer than about half an hour in any given place and only affected part of the country before moving further north-east. Within a very short period of time, and almost out of the blue, we saw a very significant loss.”

“What is important is not just that it happened, but how quickly it happened,” he added. “It generated very large losses to property and motor.”

Severe convective storms, hail and wildfire are not new exposures, but Camara said their frequency is increasing at the same time as housing, urbanisation and other concentrations grow in exposed regions.

“If you combine that with increasing geographic clustering and significant amounts of housing and urbanisation in exposed regions, it compounds the problem and makes the situation increasingly complicated and difficult to address, both for societies and insurers.”

“You can either accept the losses every few years, or think about mitigation measures that help keep risks insurable.”

The Swiss storm, he said, was “a very important reminder of how quickly these kinds of events can materialise and affect insurance balance sheets, and societies”.

Keeping risks insurable

The response, Camara said, has to extend beyond transferring more risk to insurers and reinsurers. “You cannot just think of insurance as the outcome and the solution. We need to think about mitigation in a more robust manner,” he said.

“You can either accept the losses every few years, or think about mitigation measures that generate insurability,” Camara said. “Something that might otherwise cause losses every five years could, through mitigation, become something that happens much less frequently, making the risk insurable where previously it might not really have been.”

That effort cannot sit with insurers alone. Camara said households, governments and the insurance industry all have roles to play, including sharing prevention measures that have worked elsewhere.

He pointed to the flood relief tunnel being built between the Sihl river and Lake Zurich as an example of infrastructure being used to reduce a major urban accumulation risk. “Imagine Zurich and its main railway station being paralysed for months, or potentially longer, because of flooding. The consequences would extend well beyond the city itself.”

The tunnel allows large volumes of floodwater to be diverted into Lake Zurich instead of flowing through the city, reducing the likelihood of severe damage from an extreme event.

“Governments, insurance companies, reinsurers, technical experts, people responsible for building codes and policyholders all have to move together on this,” Camara said. “It is a challenge we can only tackle jointly.”

More risk transfer

Mitigation does not reduce the need for reinsurance. Camara expects Baden-Baden discussions to focus on sustainable protection as underlying risk increases. “I think it will be a conversation about sound risk transfer mechanisms in a context in which risk is not diminishing; it is actually growing,” he said. “I think more reinsurance will be part of the answer, with more risk transfer and more capital to back it up as well.”

Clients are also looking for protection that can survive changing market conditions rather than structures that work for only one renewal. “People are interested in having steady reinsurance structures that are sustainable and available not just from one renewal to the next, but over longer periods of time. That is the kind of challenge we want to address,” he said.

For more news from Baden-Baden Today, click here.

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