‘We cannot rest’ on nat cat risk – Swiss Re calls for intense collaboration

The universe of risks is expanding. From geopolitical uncertainty and cyber exposure to accelerating climate volatility, extreme events are no longer an anomaly. Swiss Re’s Leopoldo Camara says more cooperation is needed to tackle these challenges – there’s no room for complacency.

Key points:
$100bn+ nat cat losses now 'the norm'
Industry must act, not just absorb
Data, not just capital, is key

“This is the fifth year in a row in which insured losses from natural catastrophes have exceeded $100 billion. It’s almost the norm now, and it’s almost not news any more. But this, in my view, is big news,” said Leopoldo Camara, head of Northern, Central and Eastern Europe of P&C Re at Swiss Re. Click here to watch the full video interview.

According to Swiss Re’s latest sigma report, global insured losses from natural catastrophes in 2024 reached $137 billion, with most of that driven by “secondary” perils such as severe convective storms (SCS) in the US and major urban floods across multiple regions, alongside Canada’s highest-ever natural catastrophe losses.

By 2025, that trend showed no sign of easing. “The first half of 2025 was actually the second costliest nat cat half of a year in history,” Camara told Baden-Baden Today. “We had the LA wildfires and severe thunderstorms. Only the LA wildfires are alone generating an insured market loss in excess of $40 billion.”

What stands out, he said, is the nature of those losses. “The bulk of the losses are extreme weather- related. The so-called secondary perils have become primary.”

‘We cannot rest’

Camara said while the industry has absorbed the shocks so far, it cannot afford complacency. “The good news is that the industry – insurance and reinsurance – is withstanding. We are finding ways of dealing with this, but we cannot rest. This is a challenge that remains and continues to grow.”

The answer, he insists, lies in joint effort. “We need very intense collaboration across the value chain, to address this challenge.”

As an economist, Camara views nat cat-driven losses as an externality that must be internalised into everyday decision-making. “Extreme weather is an externality we need to adjust to. We can’t control it, but we can internalise some of the challenge by increasing the collaboration across the value chain.

“We need to get better at deciding where to build, how to build, how to contain losses, how to prevent them, how to insure, how to know the risk and how to reinsure. Building code designers, fire brigades, officials planning building land zones, modellers, insurers, reinsurers – together we are more effective.”

These, he says, are essential agenda items for Baden-Baden 2025 – a focus not only on renewals but on “how we address the extreme weather challenge in a sustainable way”.

Lessons from Europe and beyond

Camara’s region stretches from Northern Europe, across Germany to Central and Eastern Europe, markets that have all felt the sting of floods, hail and storm losses. “Last year, we had a big event affecting Eastern Europe. It generated very significant losses,” he said, referring to floods associated with Storm Boris, which hit Austria, the Czech Republic, Germany and Poland.

Collaboration needed between insurers, reinsurers, brokers, governments and communities.

“Insurers and reinsurers have paid losses, but we’ve also seen that a good number of mitigation measures took place in the countries affected,” he said. “Austria, the Czech Republic, Hungary and Poland have developed and implemented technology that has helped contain losses. On the back of very severe events in the last 20 years, these technologies have shown that they work.”

He believes such examples are replicable. “In Europe, and globally, there is a great opportunity to learn from experience and from initiatives that have been taken in other places, and think through whether they apply in a relevant country where maybe that kind of investment has not been done.”

Collaboration, he stressed, must stretch beyond the sector itself. “When we speak about collaboration, we also mean collaboration not just between insurers and reinsurers and brokers who meet in Baden-Baden, but also governments and communities.”

Prevention, in his view, works at every scale. “The nice example is the flood tunnel that was recently constructed and finalised in Switzerland (Sihl flood relief tunnel, near Zurich). That’s a big investment, of course, in excess of €150 million. But you can also have small-scale mitigation that can be very effective, like building a little wall ten metres away from your cellar, where a river might come by and overflow every ten years,” he said.

Learning in all directions

If physical defences are one pillar of adaptation, information is the other. “As we take risks, we need to make sure that we have a good grasp of the risk, and that requires everywhere location intelligence,” Camara said. Two decades ago, “we were struggling to get zip codes half way right for big locations”. Now, “you can be incredibly precise in determining the location, but also the height of a building and its location, and measure its exposure to flood risks in a very accurate way”.

But precision still needs sound values. “We also need to have proper evaluations,” he said. “We’ve seen in recent events that sometimes there have been surprises in terms of the values that were actually in play. A good example of this is what happened in Italy a couple of years ago, when a hail event generated losses that exceeded everyone’s expectations because of solar panel installations and insulation that had not been really fully registered by the industry.”

Models, too, must be challenged. “It’s very useful to look at the variety of model outputs to form a view of the likelihood and shape of events, and all of us need to constantly ask ourselves ‘what are we missing?’” Learning, he added, “goes in all directions. Events are always horrible, but they are also an opportunity to learn”.

That mindset shift is also changing how reinsurers work with clients. Camara said Swiss Re is investing in solutions that go beyond traditional risk transfer. “We have solutions that can relate to data and data intelligence, modelling and analytics,” he explained. “We also have colleagues who work on public-sector solutions, so we’re happy to be part of innovation and development that sometimes involves not just a client, but also a municipality or a government, to develop insurance concepts that help all of us address the challenge better.”

Ultimately, the goal is not just to share risk, but to reduce it. Camara said that balance between innovation and underwriting discipline will define the upcoming renewals. “The challenges of last year have not gone away. They’re similar, and our risk appetite hasn’t changed either. So our responses to the same question are likely to be similar.”

He concluded that the industry needs deeper, not faster, change. “To address extreme weather, shifting high-frequency layers between insurance companies and reinsurance, that’s not really addressing the challenge in a sustainable way,” he warned.

“We need to find ways to combine all the elements in the value chain to develop better, resilient answers to the question: how do we address the extreme weather challenge?”