Who in the corporate world has more skin in the game than the insurance industry? There is one other: the reinsurance industry, those global players who insure the insurers.
Of these, Munich Re stands near the top of its industry. What this reinsurer says about what’s happening globally requires our attention. On September 6, 2026, the company published its latest report noting that insured losses for “non-peak perils,” usually a smaller chunk of their business, surpassed US$ 104 billion in 2025, the sixth consecutive year over $100 billion. These insured losses didn’t represent total client losses. That number, which includes uninsurable losses, was more than double.
Non-Peak Perils Producing More Peak Payouts
The definition of non-peak perils covers ecological events falling short of the most severe natural disasters. These include weather-event disasters like crop- and property-damaging hailstorms, excessive rainfall events leading to floods, tornadoes, severe thunderstorms, seasonal flooding, wildfires, prolonged heatwaves, droughts, etc.
Although these sound perilous to readers, Munich Re puts them in the “medium-sized loss event” category. The report notes:
“Whilst non-peak perils were long regarded as events involving comparatively low losses overall, they have now begun to add up to loss levels that were previously associated primarily with major events. This trend is progressively becoming the new normal.”
What is happening from the ecological changes happening here on Earth is a shift where non-peak perils are causing greater economic consequences. In 2025, Munich Re noted that non-peak perils represented 97% of its payouts for insured losses. The remaining 3% covered peak geophysical events like earthquakes, volcanic eruptions, and tsunamis.
How come only 3% when damages from an earthquake and tsunamis can be overwhelming to communities and victims? Geographic locale explains. For example, the earthquake in Myanmar in 2025 didn’t involve reinsurers because very few of the victims owned insurance. A lower country GDP equates with fewer of its citizens purchasing insurance. That’s why total reinsurance payouts amounted to between $3 and $4 billion despite the much higher numbers for real economic and human damages.
New Reinsurance Risks Categories
Insurers and reinsurers face a growing number of categories beyond the natural risks. For example, the rapid advancement of artificial intelligence (AI) globally is imposing increasing cyber risks and insurance claim payouts.
Cyber Risk
The cost of cyber risk for insurers has been growing. This was before AI. Now, cybercriminals are incorporating AI into their criminal toolkits for fraud and ransomware. The Munich Re report notes “that 89% of companies say they do not feel adequately protected against this.” To provide better coverage to clients, the industry expects insurance premiums to double in the next half-decade.
Pandemic and Disease Risk
COVID-19 revealed another risk: global pandemics facilitated by climate change. Insect-borne or vector-based diseases are spreading from the equator poleward because of a warming atmosphere. Although not defined as a pandemic, the threat to individuals and businesses from vector-borne disease spread is growing. Many insurers are not necessarily prepared to provide coverage. Instead, the industry is defaulting to governments to provide a disease backstop fund to cover work losses for individuals and businesses.
There was no insurance coverage during the COVID-19 pandemic. Governments performed the backstop, with payouts leading to record annual government budgetary deficits across the globe. To date, no countries have fully recovered from these pandemic-inflicted debts.
Other Non-Ecological Risks
Having covered AI, cybercrime and pandemic and vector-borne disease spread, what’s left in our bag of global risks? The latest World Economic Forum annual global risks report provides several categories, many beyond the capacity of insurers and reinsurers. What are we talking about?
- Geopolitical risks like government collapses and civil war,
- Military risks involving war between nations,
- Large-scale economic, trade and tariff wars (Trump Liberation Day tariffs as examples),
- Critical failures of national and intercontinental electrical grids, freshwater distribution systems, desalination plants and telecommunications networks,
- Agricultural challenges, crop failures, and food insecurity,
- Social and government breakdowns,
- Industrial and technological accidents (think the Bhopal chemical leak or the Chornobyl nuclear accident),
- Space accidents and satellite network infrastructure failures (think a cascading failure affecting constellations like Starlink and other competitors).
For insurers and reinsurers, most of these risks are beyond the means to provide coverage. Where the industry sees itself is largely in the ecological orbit.
Climate Change Increases Insurer Consequences
What does ecological risk mean for insurers and reinsurers as well as their clients? Catastrophic non-peak and peak climate events place risks on property.
For the insurers, it means increasing numbers of claims, inflated reconstruction costs, and more expensive payouts. For the reinsurers, it is the last line item on the insurers’ list that is a concern.
For insurance purchasers seeking property damage and loss coverage in the face of more frequent and costly ecological risk, insurers are asking that several environmental pre-conditions be met, including:
- The use of fire-resistant materials and designs for building and property in wildfire zones,
- Sea walls, greater shoreline easement for building placement, and stilts and foundation supports suitable to withstand rising sea levels,
- Roof anchors and wind-resistant materials usage in reconstruction in high-wind and tornado zones.
For policy purchasers, it means:
- Paying higher premiums,
- Assuming larger deductibles,
- More insurance exclusions,
- Cash-over-replacement-cost settlements rather than full replacement value.
Another consequence of increased climate risk is already apparent. Fewer insurance companies are offering ecological coverage policies to homeowners and businesses. Fewer insurers means less competitive choice for consumers, higher premiums, and more uninsured or underinsured properties.
Reinsurer Risk Modelling for Climate Change
The relationship between reinsurers and insurers is changing to the disadvantage of the latter. They are being asked to assume more risk, accept more coverage restrictions, and pay more for what they can get.
Reinsurers have invested heavily in climate change research. They are modelling global climate, as the implications of a warming ocean and atmosphere can be incorporated into Earth Digital Twin models for long-term forecasting.
These tools are helping the reinsurance industry to determine future probabilities based on real science that can help quantify the risks associated with:
- A warming and more acidic ocean,
- Atmospheric warming exceeding a global mean of 1.5°Celsius (2.7°Fahrenheit),
- Longer and more extreme heat events,
- Longer droughts,
- Heavier rainfall leading to increasing flash floods and landslides,
- Rising sea levels and more coastal flooding and inundations,
- Urban encroachment into hazardous wildfire zones,
- Rising frequency of rebuilding and costs.
What has saved the reinsurance industry to date is a substantial war chest from premiums accumulated over the last decade in anticipation of the accelerated payouts that are here, with more coming.
