Fwd: Reinsurers in Monaco place climate bets

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Sep 10, 2025, 9:42:50 AM (3 days ago) Sep 10

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Today’s newsletter takes a closer look at reinsurers, an industry that exists to help primary insurers cope with losses when disaster hits. As we reported this week, reinsurers are taking new steps to shield themselves against the financial fallout of storms, floods and other severe weather events. Read more below. For unlimited access to climate and energy news, please subscribe.

Reinsurers place their climate bets

By Leslie Kaufman

In Monaco this week, the world’s top reinsurers are gathering for their biggest annual conference Rendez-Vous de Septembre (RVS). The setting could hardly be better: sunny skies, another year of strong financial results – after several underperforming ones – and bubbly flowing at a seaside reception.

That celebration, however, comes at the price of a notable shift in the business. Reinsurers have raised prices sharply and pushed up attachment points — the industry’s equivalent of deductibles. Over the last decade, the top 19 global reinsurers have more than halved their exposure to insured catastrophe losses, and analysts at S&P say the burden is likely to shrink further.

Already the situation has sent powerful tremors through the American homeowners market. As reinsurers pull back their share of the risk exposure, insurers in America have had to adjust in turn. Premium prices have seen double digit percentage increases nationally (and much more in disaster prone states like Louisiana and California) and there are growing “insurance deserts” as companies refuse to renew homeowners in risky areas where they can’t get the compensation they think they need.

To the industry this is just common logic. In interview after interview executives gathered here have made the same point: Americans keep building in risky areas. As home values in these locations rise, so will insurance rates. Afterall, it’s the industry’s job to signal risk, not subsidize it.

But played to its obvious conclusion there are worrisome implications. Risk is bad now, but climate change will make storms and wildfires worse. Not that long ago a year with $100 billion in insured natural catastrophe losses was considered significant. Now that has become the norm and the industry is pushing toward $150 billion.

The reinsurance giant Swiss Re, which calculates that natural catastrophe insured losses are growing by 5 to 7 percent annually, sees a 1 in 10 chance of a $300 billion dollar year in the near future.

Karen Clark, who pioneered catastrophe modeling in the 1990s, thinks the US has been “lucky” in that no category 5 hurricane has hit a major city in the last 25 years. (Even Katrina had weakened to a category 3 before it made landfall.) A direct hit on Miami or a major East Coast metropolitan area could easily be a $200 billion event in and of itself.

A barge rests against a damaged building in the Lower Ninth Ward of New Orleans, Louisiana, Sept. 20, 2005. Photographer: David Rae Morris

The insurance industry is simply not going to be on the hook for all of that. Instead, they want a lot more risk mitigation from society: tougher building codes, bans against building in flood plains and in areas at the edge of fire-prone forests.

As Urs Baertschi, chief executive of property and casualty reinsurance at Swiss Re, put it this week in an interview: “We are starting to reach the limits of traditional insurance.”

Unfortunately, the US at least is going the opposite way. The Trump administration has stopped the payouts of $1 billion in funds targeted at just the type of climate mitigation the industry says it needs to bring down prices: such as levees and stormwater-runoff channels.

Perhaps there is some reckoning down the road where too many people just can’t or won’t pay for the risk the insurance industry sees coming their way. But at RVS executives say on background that for now they can flourish with a smaller market that pays more.

Clark, who is co-founder and chief executive of Karen Clark & Co., a pioneering catastrophe modeling firm in Boston says that the industry is used to being blamed. “People don’t want to understand their insurance. They’d rather bitch about it,” she says.

Clark says the anger over prices today in the US is part of a familiar cycle. After Hurricane Andrew hit Florida in 1992, the industry reevaluated risks from hurricanes and tripled prices. People in the town halls she visited in Florida were furious.

Inspired by that, she bought the rights to a website: bitchaboutyourinsurance.com, but never launched the site. Maybe the opportunity is now ripe.

Chips off the table

10%

This is the percentage of total insured catastrophe losses that were covered by the reinsurance industry last year, compared with about 25% in 2019 and well below the historical average of 20%, according to S&P.

Changing the stakes

"I don't expect the pendulum to swing back anytime soon."

Simon Ashworth

Chief analytical officer for insurance ratings at S&P

Ashworth expects global reinsurers will continue to reduce their exposure to insured catastrophe losses.

Also on our radar

By Laura Millan

European Commission President Ursula von der Leyen delivered her annual speech in the European Parliament today, which marks the start of the EU’s political year. Von der Leyen said the bloc “must stay the course on our climate and environmental goals."

“The science is crystal clear and the economic and security case is equally compelling – this transformation is central to our push for independence,” she said.

Critics said the rhetoric was at odds with her administration’s moves to cut regulation on a number of green-related issues, including environmental protections and ESG requirements, which civil society organizations say will lead to more pollution and weaker emissions targets.

“We’re a little bit frustrated because von der Leyen’s speech doesn’t match what we’ve seen coming out from her in the first year of her second mandate,” said Chiara Martinelli, director of Climate Action Network in Europe. “This is very worrying.”

The EU’s chance to prove its commitment to climate action at home and abroad will come on Sept. 18, when environmental ministers from member states will meet to discuss the commission’s proposed target to cut greenhouse gas emissions 90% by 2040. Also pending is a 2035 emissions cutting plan they must submit to the United Nations ahead of the COP30 meeting in Belem, Brazil, in November.

Ursula von der Leyen, president of the European Commission Photographer: Simon Wohlfahrt/Bloomberg

More from Green

The Trump administration has been slashing green energy incentives, freezing the construction of wind farms and ordering coal-burning power plants to keep running longer than planned. And yet, more American homes and businesses are getting their power from renewable sources than ever before — and in greater amounts.

In June, almost one-quarter of US power generation was green, up from 18% in the year-earlier period, according to data compiled from the US Energy Information Administration. The question now is whether the trend continues with President Donald Trump back in the White House.

The recent growth in renewables usage is almost certainly tied to investments made prior to Trump’s election in November. Under former President Joe Biden, the US backed roughly $100 billion of investments in clean energy. Now, the Trump administration is taking a sledgehammer to those efforts by opposing offshore wind farms and eliminating incentives for electric vehicles and solar power.

Read the full story on Bloomberg.com.

The world’s biggest battery project secured about $1 billion in public and private financing, and will begin construction immediately in northern England, marking a significant step forward in the UK’s transition to renewable energy.

China’s world-leading solar, battery and EV companies have sharply increased foreign investment plans in recent years, pledging more than $210 billion since 2022, according to new research.

European Union nations will discuss potential changes to the role of imported carbon credits in the next decade in a drive for a rapid deal on the bloc’s landmark 2040 climate goal.

Worth a listen

On the latest episode of Zero, we hear from you. Bloomberg Green’s Akshat Rathi answers questions from listeners.

Is Donald Trump a climate warrior in disguise? How do we tell if corporations are greenwashing or not? And are we about to enter a new era of collaboration when it comes to green tech?

If you have a burning question for the show that you’d like Akshat and the Bloomberg Green team to answer, send us a voice note or message to zer...@bloomberg.net

Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.

US President Donald Trump Photographer: Aaron Schwartz/CNP

Live with Bloomberg Green

Bloomberg Green New York: Join us Sept. 25 for a solutions-focused look into a new era of climate action during Climate Week NYC. Following the 80th United Nations General Assembly, we’ll hear how top leaders in business, finance and government are approaching climate issues during times of geopolitical uncertainty. Learn more here.