Disaster Risk Challenges Insurance Systems

A new report published by The Geneva Association has highlighted increasing pressure on public–private insurance frameworks as the frequency and severity of disasters continue to rise globally. The findings suggest that without stronger integration of risk reduction measures, the long-term viability of these programmes may be undermined.

The study reviewed 14 public–private insurance programmes (PPIPs) and found that, while many have contributed to improving market stability and extending insurance coverage, they continue to face significant structural challenges. These include growing financial liabilities, the risk that public schemes may discourage or displace private insurance participation, and insufficient incentives for individuals and businesses to actively reduce their exposure to risk.

According to the report, both natural and human-induced disasters—such as floods, wildfires, cyberattacks, and pandemics—are becoming more frequent and more severe. This trend is contributing to higher levels of insured and uninsured losses, while also increasing pressure on government disaster relief systems and public budgets.

The Geneva Association stressed that effective public–private insurance programmes must balance four central objectives: maintaining affordable and accessible insurance coverage, safeguarding public finances, ensuring continued participation by private insurers, and enabling the timely payment of claims following catastrophic events.

It noted that many existing frameworks still operate largely as post-disaster compensation mechanisms rather than comprehensive risk management systems. The report therefore emphasised the need to shift greater focus towards prevention, resilience-building, and reducing overall exposure to hazards.

Jad Ariss, Managing Director of The Geneva Association, stated that such programmes should go beyond simply providing financial compensation after disasters. He underlined the importance of strengthening incentives for risk reduction, improving resilience at societal level, and easing long-term fiscal pressure on governments.

Hélène Schernberg, Director of Public Policy and Regulation, said policymakers should adopt a structured approach when designing public–private insurance systems. This includes assessing existing protection gaps, prioritising risk-reduction strategies and improvements in private insurance markets, and clearly defining the extent of risk governments are willing to assume.

The Geneva Association represents insurance companies headquartered in 26 countries, collectively managing around US$21 trillion in assets and providing protection to approximately 2.6 billion people worldwide. The report concludes that embedding risk reduction more deeply into insurance frameworks will be essential to ensuring that disaster coverage remains both financially sustainable and widely accessible.

Key findings from the report