Major reinsurer SwissRe has identified extreme heat events and plastic pollution as key emerging risks that will drive up insurance premiums for households and businesses in coming years.
The company’s latest SONAR report, which examines risks facing the global insurance industry, highlights five structural challenges currently affecting insurers and three emerging threats that will shape future coverage.
SwissRe identified a lack of consumer trust in the industry as a significant structural risk, describing it as a challenge to the core value proposition of insurance.
The report also flags social inflation as a real-time drag on profitability, particularly in the United States casualty market. Rising legal defence costs from large court verdicts are forcing insurers to pass expenses onto consumers through higher premiums.
Extreme heat events feature prominently in the emerging risks assessment. SwissRe expects these events to occur more frequently, generating claims from increased accidents, illness, chronic diseases, and deaths. The report warns extreme heat could stress healthcare systems, raising medical insurance costs.
Rising temperatures are also enabling fungi to adapt to warmer conditions. This development could increase property insurance claims due to mould infestation and threaten agricultural yields as multi-drug-resistant fungal strains develop.
The report identifies plastic pollution as another emerging risk, noting that plastic particles have already generated litigation over environmental damage and human health impacts. SwissRe warns that advances in attribution science showing causal links could fuel litigation across many sectors, hitting liability insurers most.
Digital innovation presents additional risks through deepfakes and social media disinformation, which will likely impact life and health (L&H) and casualty insurance lines.
The report also examines how artificial intelligence might influence workplace skill requirements, potentially increasing operational errors where automation leaves insufficient human expertise.
SwissRe flags ultra-processed food consumption as a longer-term risk that could drive liability and health claims as evidence mounts linking these products to obesity and diabetes.
The SONAR report uses crowd-sourced analysis from SwissRe’s global network to identify emerging risks for early assessment.
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