PUBLISHER: Orion Market Research | PRODUCT CODE: 1771333
PUBLISHER: Orion Market Research | PRODUCT CODE: 1771333
Catastrophe Insurance Market Size, Share & Trends Analysis Report by Insurance Type (Catastrophic Health Insurance, Earthquake Insurance, Flood Insurance, Storm Insurance, Terrorism Insurance, Volcano Insurance, Wildfires Insurance, and Other Insurance), by Catastrophe Type (Man-made Events, and Natural Disasters), by End-User (Commercial, Personal, and Residential), and by Distribution Channel (Direct Insurance Providers, Brokers & Agents, Bancassurance (Bank-Assisted Insurance Sales), and Online Insurance Platforms) Forecast Period (2025-2035)
Industry Overview
Catastrophe insurance market was valued at $215 billion and is projected to reach $360 billion by 2035, growing at a CAGR of 4.8% during the forecast period from 2025 to 2035. The catastrophe insurance demand is fueled by growing climate-related catastrophes, urbanization, infrastructure expansion, regulatory needs, AI and big data analytics, heightened reinsurance demand, increased awareness, and increasing economic losses as a result of the rising cost of disaster recovery.
Market Dynamics
Climate Change and Rising Frequency of Catastrophes
Climate change raises the frequency of natural disasters, generating greater demand for catastrophe insurance due to the intensity and uncertainty of these risks. The National Oceanic and Atmospheric Administration (NOAA) reports that, in 2024, natural disasters globally incurred total losses of $320 billion, with $140 billion covered, exceeding the inflation-adjusted averages of the last decade and 30 years. Weather-related catastrophes accounted for 93% of these total losses and 97% of insured losses, marking it as the third most expensive year for insured losses and the fifth for total losses since 1980. Non-peak perils such as floods, wildfires, and severe thunderstorms added substantially, with losses totalling $136 billion, of which $67 billion were insured, showing an increase from the decade's previous average. In contrast, tropical cyclones, with influence primarily in the US with large hurricanes, accounted for an additional $135 billion to the total losses and $52 billion to the insured losses. Although the economic cost, the number of deaths in 2024 was approximately 11,000, which was significantly lower than the historical mean.
Growing Natural Disaster Frequency and Severity
Climate change enhances extreme weather conditions that require increased insurance coverage and catastrophe policies for earthquake-risk areas such as Mexico, fueling market growth. For instance, in April 2024, the World Bank issued three catastrophe bonds worth $420 million to offer insurance to Mexico against named storms along its Atlantic coast and earthquake occurrences. The new cat bonds raise coverage by $60 million from the earlier ones. Approximately 40% of Mexico's area and around one-third of its population are vulnerable to natural disasters such as hurricanes, storms, floods, earthquakes, and volcanic activity, with 30% of the GDP at risk from three or more hazards and over 70% at risk from two or more hazards.
Market Segmentation
Natural disasters Segment to Lead the Market with the Largest Share
Natural disasters, including earthquakes, hurricanes, floods, tsunamis, wildfires, and volcanic eruptions, are catastrophic events that result in extensive damage to life, property, and the environment. Climate change is leading to more intense natural disasters, increasing insurance coverage awareness, and propelling market growth as a result of possible financial losses. In October 2024, as reported by the Center for Disaster Philanthropy, the US saw 44 major floods, each worth over a billion dollars in damage, with a total average cost per year of $4.5 billion. The floods have claimed at least 738 lives reported in 2024 alone, mostly due to driving accidents. The economic cost of flooding in the US annually varies between $179.8 billion and $496 billion, emphasizing the need to invest in flood protection that can generate a high return by limiting future losses.
Storm Insurance: A Key Segment in Market Growth
Storm insurance ensures coverage of major storm-related damages to buildings, personal property, and uninhabitable properties against financial loss, repair, replacement, and living expenses. Storm insurance protects homeowners, businesses, farming producers, cars, marine and aviation sectors, and government projects from financial losses due to damage caused by storms. It secures business operations, guarantees crops, animals, vehicles, and cargoes, and protects large-scale development projects.
The global catastrophe insurance market is further divided by geography, including North America (the US and Canada), Asia-Pacific (India, China, Japan, South Korea, Australia and New Zealand, ASEAN Countries, and the Rest of Asia-Pacific), Europe (the UK, Germany, France, Italy, Spain, Russia, and the Rest of Europe), and the Rest of the World (the Middle East & Africa, and Latin America).
Government Investments and Modernization in Asia-Pacific
India's diverse climate and topography make it susceptible to frequent flooding, impacting livelihoods and driving market growth, especially for those without financial safety nets. For instance, in February 2024, India's WRMS Global collaborated with MIC Global to introduce a flood resilience insurance product for gig workers and merchants. The insurance, utilizing MIC Global's MiIncome digital reinsurance platform, seeks to reduce the financial effects of income loss due to floods. The Flood Resilience trigger addresses micro businesses, merchants, and gig workers in India, offering financial coverage against local flooding. The collaboration utilizes WRMS Global's experience to boost productivity, promote sustainable practices, and guarantee income reliability.
North America Region Dominates the Market with Major Share
North America holds a significant share because the hurricane model is a computer-based system that is utilized to forecast and simulate hurricane formation, intensity, path, and effect. It can be divided into physical models, statistical models, and hybrid models that are capable of utilizing atmospheric conditions, oceanic data, and past storm history. Hurricane simulations are applied in weather forecasting, disaster planning, climate change studies, energy applications, and crop impact studies, offering real-time forecasts, long-term trend identification, and protection planning. Additionally, natural disaster risks have increased insurance costs, rendering coverage more expensive, elevating uninsured property, and causing some insurers to leave markets. For instance, in August 2024, Aon unveiled an upgraded hurricane model designed to more effectively manage storm risk, as US hurricanes have caused $1.1 trillion in economic damage and $520 billion in insured losses since 2000. This new model, Impact Forecasting's US Hurricane v3.0, includes real-time updates and enhancements such as an updated event set, refined hazard and vulnerability components, and a broader range of occupancy classes and modifiers to more accurately define exposure that is crucial for the reinsurance industry.
The major companies operating in the global catastrophe insurance market include Allianz, People's Insurance Company of China Ltd., Selective Insurance Group, Inc., Sompo International Holdings Ltd., and Tokio Marine & Nichido Fire Insurance Co., Ltd., among others. Market players are leveraging partnerships, collaborations, mergers, and acquisition strategies for business expansion and innovative product development to maintain their market positioning.
Recent Developments