Climate change

The issue

Climate change has far-reaching consequences, impacting weather patterns, natural ecosystems, human health and the global economy. Swiss Re Institute estimates that the impacts of rising temperatures could reduce global GDP by as much as 18% by 2050, compared with a world without climate change. However, this impact can be lessened if decisive actions are taken by the public and private sectors to implement climate adaptation measures and accelerate the transition to a net-zero world.

The risk

Given the high public awareness of this topic, there is often a misconception that climate change is solely responsible for the increase in insured losses for natural catastrophes in recent years. In fact, the majority of the increase in losses can be explained by factors such as rising property values, urbanisation in exposed areas and changing claims behaviour. Climate change does, however, play a significant role in the increasing severity and frequency of secondary perils, such as floods and wildfires.

Financial resilience is being tested by climate change as property insurance pricing is adjusted upwards to accommodate increasing losses, thereby making insurance protection less affordable. Furthermore, the impact of climate change on human life and health needs to be further understood in order to develop adequate insurance products and close protection gaps.

The opportunity

Currently, the majority of climate-related economic losses are uninsured, presenting a significant opportunity for insurers to close this important protection gap. Reinsurers play a key role in providing risk transfer capacity, risk knowledge and long-term investment.

In recent years, governments have been increasingly entering into public-private partnerships to develop disaster financing solutions for climate risks. This work is continuing to grow, particularly in emerging markets. In addition, there is the opportunity to expand the available insurance capacity via innovative risk transfer transactions with the capital markets.

As large asset holders, re/insurers can also contribute to climate change mitigation through responsible investing. Swiss Re has already established an ESG investment policy, which includes measures to reduce the carbon impact of our investment portfolio.

Swiss Re’s response

Commitment to the market

Swiss Re remains committed to its position as a leader in re/insuring against climate-related risks. Its risk transfer capacity is supported by the ability to place risks in the capital markets via the Alternative Capital Partners unit. Further, Swiss Re offers products that de-risk industries such as renewable energy, providing the risk transfer necessary for participants in these industries to access financing and pursue projects.

Consultation and engagement

As a global leader in the re/insurance industry, Swiss Re has a role in supporting other organisations in their efforts to reduce global warming and climate change.

To this end, Swiss Re is a member of the UN-convened Net-Zero Insurance Alliance and Net-Zero Asset Owner Alliance. In 2021, Swiss Re also joined the Taskforce on Nature-related Financial Disclosures to commit to better and more transparent reporting on nature-related risks.


Swiss Re’s underwriting for climate risks remains robust. The work is underpinned by its global Catastrophe Perils (Cat Perils) team, which comprises more than 50 experts. The team develops Swiss Re’s proprietary models for natural catastrophe risks worldwide. These models reflect current and evolving risk drivers such as climate change, urbanisation and various socio-economic trends.

The Cat Perils team provides more than 190 models across a range of perils, including key exposures such as tropical cyclones in Northern America, winter storms in Europe or earthquakes in Japan. Their work also covers emerging secondary perils such as river flooding in China or hailstorms in Europe.

Swiss Re’s models are an important steering tool for property natural catastrophe underwriting. They enable Swiss Re to benchmark business opportunities against profitability hurdles, to determine risk appetite and to assess the level of capital required to support the global property portfolio.

Swiss Re’s models ensure underwriters globally have the same knowledge basis, for assessing risks, whether they are underwriting risks for smaller clients in the US or working with a global broker in EMEA. This consistency builds confidence in both the accuracy of Swiss Re’s costing and the comparison of actual loss experience to modelled and expected losses.

Learn more about Swiss Re’s market context

Our strategy in action
Discover how Swiss Re advanced its business in 2021 by focusing on three strategic pillars: risk transfer, risk insights and risk partnerships.