JPMorgan said 2025 will be the fifth consecutive year that global catastrophe claims exceed $100 billion, but that will be less damaging to reinsurers, which have remained within or below their catastrophe loss budgets in recent years because of changes in who is responsible for paying claims.
J.P. Morgan’s Love Actuary report highlights that catastrophe insurance losses have been on the rise. According to Swiss Re, before 2021, global insured catastrophe losses exceeded US$100 billion in only three years. However, this level has been breached every year since 2021 and will likely be breached again in 2025, with over $100 billion now becoming the “new normal”.
JPMorgan analysts said: “We believe the best way to think about catastrophe claims is relative to total insurance industry premiums, on which basis the impact is less pronounced.
“Catastrophe claims over the period 1980-2025 were equivalent to around 3% of non-life industry premiums, compared with 2.9% in 2021-25 terms. On a 10-year rolling average, catastrophe claims relative to industry premiums have remained relatively stable at approximately 3% of premiums. In fact, catastrophe claim levels may actually have declined slightly relative to industry premium size.”
The report noted that catastrophe losses are believed to increase ahead of 2023, which is a significant headwind for reinsurers responsible for taking some of the catastrophe risk from the insurance market.
The analysts noted, “But we can see that 2021-25 is an average year for catastrophe losses relative to industry size using the 1980-2025 average.
“We believe what appears to have happened is that there has been a change in who is responsible for paying the claims.”
JPMorgan said reinsurers exceeded catastrophe loss budgets in 2021 and 2022 but have stayed at or below budgets on average since 2023.
“However, if we look at 2023-2025 at an industry level, they do not show significant anomalies in terms of below-average claims. This suggests that the rise in reinsurance retention rates in early 2023 is having a meaningful impact on the profitability of the industry,” J.P. Morgan concluded.
