Asia-Pacific insurers are confronting intensifying pressure to strengthen their resilience to climate-related risks, as increasingly frequent and severe weather events expose deep-rooted vulnerabilities in underwriting, capital allocation, and long-term strategic planning. What was once regarded as a technical issue confined to underwriting has now emerged as a systemic financial threat, with profound implications for the stability of regional and global insurance markets.
A recent global survey conducted by MSCI, Inc., encompassing 50 of the world’s leading property and casualty insurers and reinsurers, reveals a widening disconnect between awareness and effective implementation. While many firms express confidence in their individual preparedness, far fewer believe that the industry collectively is equipped to manage the escalating risks posed by climate change.
Heightened Concern, Limited Execution
Across the Asia-Pacific (APAC) region, half of insurers surveyed believe the industry is inadequately prepared to manage physical climate risks. This perception is even more pronounced in North America, where 62% share this concern, while Europe appears relatively more optimistic at 46%. The findings reflect a global recognition of vulnerability, though the degree of preparedness varies considerably by region.
Concerns intensify further when viewed through a systemic lens. All APAC respondents reported moderate to very high concern regarding the potential for physical climate risks to disrupt financial systems—surpassing the already elevated global average of 88%. Despite this heightened awareness, tangible integration of climate risk into business operations remains limited.
Notably, 64% of APAC insurers reported significant concern about climate-related risks, yet 63% acknowledged that they remain at early or intermediate stages of embedding such considerations into underwriting frameworks, enterprise risk management systems, and capital planning processes. This clear mismatch between awareness and action highlights a critical execution gap within the industry.
Rising Losses Reinforce Urgency
Data from Swiss Reinsurance Company Ltd underscores the growing financial consequences of climate-related disasters. In 2025, global insured losses from natural catastrophes reached approximately $107 billion. Strikingly, so-called “secondary perils”—including floods, storms, and wildfires—accounted for 92% of total insured losses.
A broader breakdown of losses is outlined below:
| Category | Estimated Loss (2025) | Share (%) |
|---|---|---|
| Total economic losses | $220 billion | 100% |
| Total insured losses | $107 billion | 49% |
| Secondary perils contribution | ~$98 billion | 92% |
| Uninsured losses (approximate) | $113 billion | 51% |
Although nearly half of global economic losses were insured—a record proportion—significant protection gaps persist, particularly across emerging APAC markets. In many such economies, between 80% and 90% of catastrophe-related losses remain uninsured, leaving households, businesses, and governments highly exposed to financial shocks.
Looking ahead, Swiss Re anticipates a continued upward trajectory in insured losses, driven by demographic expansion, rising asset values, and increasing reconstruction costs. Historically, insured losses have grown at an annual rate of 5% to 7%. In extreme scenarios, annual insured losses could reach as much as $320 billion.
Uneven Regional Preparedness
The survey reveals stark disparities in climate risk integration across regions:
| Region | Risk Integration into Management | Underwriting Preparedness |
|---|---|---|
| Europe | 68% | 79% |
| North America | ~33% | Moderate |
| Asia-Pacific | 36% | 23% |
European insurers appear to be leading in both integrating climate risk into enterprise risk management and strengthening underwriting practices. By contrast, only 36% of APAC insurers have embedded climate risk into their broader management frameworks, and just 23% consider their underwriting capabilities sufficiently advanced.
Regulatory Pressure and Governance Shortfalls
Regulatory authorities across APAC are intensifying scrutiny, placing greater emphasis on board-level oversight, robust risk controls, and the quality of climate-related disclosures. However, many insurers have yet to fully align their governance structures with these rising expectations.
A notable deficiency lies in accountability. While climate risk is widely acknowledged as a strategic priority, relatively few insurers have linked climate-related objectives to executive remuneration or performance evaluations. This disconnect weakens incentives for senior leadership to prioritise long-term resilience over short-term financial gains.
Bridging the Climate Readiness Gap
To narrow the gap, APAC insurers must move decisively beyond awareness and accelerate the integration of climate risk into core business functions. This includes investing in advanced risk modelling, improving data capabilities, and aligning executive incentives with sustainability and resilience objectives.
Enhanced collaboration with regulators and industry stakeholders will also be crucial in developing consistent standards and closing protection gaps across the region. Ultimately, the challenge is no longer one of recognition, but of execution. Without coordinated and sustained action, APAC insurers risk falling further behind as climate volatility intensifies and financial exposures become increasingly comple