The global natural catastrophe protection gap widened to US$424 billion in 2025, up from US$395 billion a year earlier, even as insurance coverage broadly kept pace with rising exposures, according to new research from the Swiss Re Institute.
The figures come from Swiss Re Institute’s Natural Catastrophe Insurance Resilience Index, which measures the extent to which available private insurance protection covers modeled expected losses. The protection gap is expressed in premium-equivalent terms – the difference between premiums currently written and those required to fully cover expected economic losses.
Despite the widening gap in absolute terms, the resilience index – the share of protection needs covered by insurance – remained broadly stable at 27.3% in 2025, little changed from 2024. Over the past decade, the index improved by two percentage points, rising from 25.3% in 2015. Swiss Re Institute attributed the growth in the gap primarily to the increasing value of assets exposed to natural catastrophes.
“The rising value of natural catastrophe-exposed assets, and so the absolute protection gap, continues to pose resilience risks, despite our finding that insurance cover has broadly kept pace with fast-growing exposures,” the institute said.
Economic growth was identified as the primary driver of rising exposure, with the protection gap tracking broadly in line with nominal GDP growth.
Advanced markets in Europe, the Middle East, and Africa (EMEA) and Asia Pacific recorded resilience gains over the past decade. The insurance coverage ratio for advanced EMEA improved to 41.3% in 2025 from 37.1% in 2015, while the ratio for advanced Asia Pacific rose to 29.1% from 22.5% over the same period. In Germany, the report noted that fire and storm insurance penetration reached approximately 99% of residential buildings, while flood insurance coverage increased to 57% of households, up from roughly 20% two decades ago.
North America’s resilience index remained stable, fluctuating between 40% and 42% since 2015. However, Swiss Re Institute cautioned that stable coverage ratios mask continued growth in uninsured losses, driven by population concentration in catastrophe-exposed states and rising property reconstruction costs. In California, only 12% of residential property insurance policies included earthquake coverage in 2024, down from 30% at the time of the 1994 Northridge earthquake.
Emerging markets presented the starkest picture. Latin America and emerging EMEA maintained resilience scores of around 8% to 9%, while Emerging Asia registered just 5%, meaning nearly all newly accumulated exposure in those regions remains uninsured.
Swiss Re Institute projected that if the long-term trend of 5% to 7% annual real growth in insured losses persists, global insured losses could reach US$186 billion by 2030, up from $107 billion in 2025.
The institute reviewed US adaptation projects approved between 2010 and 2022, representing roughly US$9 billion in combined nominal project value. All projects with disclosed benefit-cost ratios generated positive net benefits, with a median ratio of 1.86. Ratios ranged from 1.2 for Cedar Rapids urban flood defenses to 9.63 for the Middle Rio Grande levees.
Evidence from Hurricane Sally in 2020 illustrated the potential for loss reduction at the property level. In Alabama, homes built or retrofitted to the Insurance Institute for Business & Home Safety’s Fortified building standard experienced a 55% to 70% reduction in claim frequency and a 14% to 40% reduction in claim severity. Loss ratios were 51% to 72% lower than those of conventionally built homes.
Swiss Re Institute noted that combining broader insurance coverage with targeted risk-adaptation measures in exposed areas offers the most viable path to narrowing natural catastrophe protection gaps globally.
