Munich Re Sees Elevated Nat Cat Losses and Growing European Reinsurance Demand

In a recent article and videocast, Munich Re discussed natural perils, geopolitical tensions, global loss trends, and reinsurance demand in Europe. According to the article, the company expects sustained demand for reinsurance amid elevated natural catastrophe losses, geopolitical instability, and cyber threats, and cited a continued need for balanced risk sharing between insurers and reinsurers in uncertain market conditions.

Munich Re said Europe is increasingly affected by climate-related perils influenced by warming temperatures and changing weather patterns. The article noted that the past 11 years have been the warmest on record, contributing to drought, flash-flood, and hailstorm risks and increasing insured values in exposed areas alongside inflation.

According to the article, Munich Re increased capacity following significant loss events, including the €10.9 billion insured loss from the 2021 Ahrtal flood in Germany and the €5.5 billion insured loss from the 2023 Kahramanmaraş earthquake in Turkey. The article stated that the company's capital position and diversification supported these decisions.

The Baden-Baden 2025 presentation referenced Europe-specific natural catastrophe trends, noting increases in severe convective storm and hail activity as well as more frequent drought and heavy rainfall events, based on Munich Re NatCat modeling.

According to the presentation, Munich Re has raised its NatCat net exposure across several peril scenarios in Europe since 2020.

Cyber risk continues to represent a major concern, with the majority of exposures uninsured, per the article. The authors noted that global cyber-insurance premiums total approximately €15 billion, accounting for less than 1 percent of global property-and-casualty premiums, and that small and medium-sized enterprises often underestimate cyber risks. The presentation also cited cyber-market growth projections, estimating a potential global premium level of roughly €29 billion by 2030.

The article referenced complexities related to international liability programs and US litigation exposure for European firms. According to the authors, companies without major US subsidiaries can still face litigation risk, including large verdicts. The presentation cited increasing US nuclear verdict frequency across regions and referenced the need for specialized underwriting and claims handling experience to manage these exposures.

The accompanying Baden-Baden presentation reflected similar themes, including the effects of inflation, geopolitical uncertainty, severe natural catastrophe events, and litigation trends. The presentation also included data showing increases in European ceded property-and-casualty premiums and growth in global reinsurance capital.

According to Munich Re, alternative capital remains limited in Europe due to the nature of regional perils.

Europe's insurance markets continue to vary by inflation trajectory, peril exposure, and reinsurer purchasing behavior, per the presentation. Munich Re said its responses differ by market, citing varied national market conditions and long-term client relationships.