No ‘single cycle’: Swiss Re urges realism as Asia’s market heats up

The traditional idea of a “hard” or “soft” market is too simplistic to describe today’s environment where catastrophe losses keep surprising to the upside and Asia’s protection gap stays stubbornly wide. That’s the view of Gianfranco Lot, CUO P&C Reinsurance of Swiss Re, who argues that the industry’s success depends less on timing the cycle and more on adapting to the structural changes shaping the current landscape.

Key points:
Public-private partnerships vital
Clean energy, AI reshape exposures
ILS adds fresh capacity in Asia

“There is no ‘single cycle’,” Lot told SIRC Today. “While competition is increasing, you cannot cover all lines in one brush. It’s important to recognise that the time on the underwriting clock differs across lines and markets, so underwriters must take a segmented, data-driven approach grounded in today’s realities.”

He added that Swiss Re has observed rate adjustments in the property non-proportional space “at still adequate levels”, but emphasised that strong demand for reinsurance persists. “We continue to see the desire of our clients to be protected by high-quality reinsurers,” he said.

“What clients can expect is consistency and transparency. We engage on a client-by-client basis, taking individual needs into account rather than a one-size-fits-all approach. The value of underwriting will continue to increase – not only because markets are becoming more competitive, but also because risk interconnectedness and complexity are rising.”

Dynamic market under pressure

Lot said the reinsurance market is operating in an environment marked by “rapid shifts and persistent uncertainty”. The sources of volatility are familiar yet evolving – geopolitical tensions, policy ambiguity, technological transformation and on top, extreme weather events that have grown more frequent and severe.

“Natural catastrophes remain a defining theme,” he said. “2025 marks the fifth consecutive year in which insured losses have exceeded $100 billion annually. Many recent events, from wildfires in Los Angeles to floods in Europe and typhoons in Asia, show that initial loss estimates often turn out to be significantly higher than first reported.

“That shows the industry is still underestimating asset vulnerability.”

Behind the rising losses lies a deeper data challenge. Exposure information remains fragmented and often outdated, especially in fast-developing regions where risk accumulation can change rapidly. “The key challenge is the quality and timeliness of exposure data, which is critical for accurate risk assessment,” Lot explained.

Liability risks are also rising. Heightened litigation activity in the US is spreading to Europe, while Asia-Pacific markets are beginning to see similar developments as regulatory and consumer protection frameworks mature.

“Amid so much upheaval and change, the re/insurance industry remains a beacon of stability – demonstrating resilience time and again in the face of major global disruptions,” he said.

Asia’s widening gap

Asia-Pacific, he observed, sits at the epicentre of these shifts. The region’s economic growth and urbanisation are creating vast concentrations of value, but insurance coverage has not kept pace.

In 2024, natural catastrophes caused $318 billion in global economic losses, yet only 46% were insured. In Asia, that proportion dropped to 16%, leaving an 84% protection gap.

“Asia is the most exposed to extreme weather volatility,” Lot said. “We expect continued rising demand for reinsurance as underlying exposures grow and loss trends increase.”

Closing the gap, he stressed, requires more than capital; it also demands a collaborative multi-stakeholder approach to risk prevention and mitigation across the insurance value chain over the long term.

“Strong partnerships between the public and private sector are key to making the world more resilient and to ensuring insurability, affordability and the availability of coverage,” he said.

Swiss Re has been investing in such partnerships for more than a decade. Since 2011, the group has supported more than 1,000 public-sector risk-transfer transactions across 80 countries, many built around parametric or blended-financing structures. One example is SEADRIF, the Southeast Asia Disaster Risk Insurance Facility, which provides rapid payouts to ASEAN countries after major catastrophes.

“Rapid economic growth and an expanding asset base are driving higher demand for protection.”

Lot said such programmes demonstrate how resilience must be built in layers: prevention, mitigation, and insurance working together. “Investing in loss prevention and climate resilience helps mitigate future risk and strengthens societal resilience,” he said.

At a structural level, the Asia-Pacific mirrors the global forces shaping reinsurance – inflation, rebuilding costs, shifting asset values and the urgent need for climate adaptation. “Rapid economic growth and an expanding asset base are driving higher demand for protection,” he said, “but they also expose the limits of traditional risk models.”

The evolving opportunities

Beyond climate-related risks, Lot sees new opportunities emerging from Asia’s technological and energy transitions. “The region’s move toward clean energy and digital economies creates significant opportunity,” he said. “Renewable energy projects, electric mobility and connected technologies are changing the nature of risk and, with them, the role of reinsurance.”

Swiss Re’s Energy Centre of Competence and Risk Data Solutions teams are developing tools to help clients manage these exposures through data-driven insights and tailored risk-transfer solutions. Investment in renewables, in particular, is accelerating rapidly. According to the International Energy Agency, China alone is set to account for 60% of all renewable capacity by 2030, having already surpassed its 1,200 GW solar and wind target six years early.

“The insurance sector plays a crucial role in advancing this transition,” Lot said. “By taking on risk and providing long-term coverage, we help direct capital into projects that might otherwise struggle to get financed — lowering the cost of capital and making renewable energy more bankable.”

Swiss Re is also expanding its use of alternative capacity such as insurance-linked securities. The global ILS market now provides more than $55 billion of risk-transfer capacity, with Hong Kong and Singapore emerging as regional hubs. “The ILS market provides important capacity for the wider APAC region, and we expect it to expand further as insurance penetration grows,” he said.

Meanwhile, rapid technological change – from generative AI to the boom in data centres and clean-energy infrastructure – is creating new forms of concentrated exposure. Lot views these as opportunities rather than threats. “These developments bring new insurance needs and demand for larger limits,” which the industry is well positioned to support,” he said.

“Globally, despite the recent slowdown in growth, cyber continues to present a compelling opportunity. This is true also in Asia-Pacific,” Lot said. “However, it is crucial to maintain realistic expectations for future growth.”

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