Expert assessment of natural hazards and reinsurance

Weather-related natural disasters are now among the key risks with a high business interruption impact. In addition to fire and cyber risks, natural perils play a special role due to their cumulative loss effect. Unlike individual losses, they often affect entire regions at the same time, posing considerable challenges in particular for the reinsurance market.

In this context, the reinsurance market performs a crucial stabilizing function, but it is increasingly dependent on reliable and high-quality risk information. Changes in land use, increasing surface sealing, and denser development mean that historical data alone is no longer sufficient. The actual risk situation on site often differs from global model assumptions, which additionally influences underwriting appetite.

In practice, it is evident that reinsurers respond less through premium adjustments and primarily through stricter underwriting criteria, reduced capacities, and higher requirements for risk management. These requirements have a direct impact on primary insurers and lead to more conservative decisions, higher deductibles, or limited cover.

In the long term, the insurability of natural perils can only be secured if risk management is consistently considered before insurance. Preventive measures, well-founded site analyses, and a realistic assessment of occurrence probabilities and loss potentials are decisive. Without this development, there is a medium-term risk of further withdrawal from natural peril coverage – with significant economic consequences.

The central message is therefore: Sustainable risk management is not a cost factor, but a strategic investment in insurability, resilience, and long-term stability.

This text was created as part of a technical expert interview on weather-related natural perils and their impact on the insurance and reinsurance market. The purpose of the exchange was to gain practical insights into current developments, challenges, and future trends in risk management – particularly from the perspective of a practitioner with many years of experience.

The initiator and interviewer of the conversation is Roman Welzel, who, in the course of a scientifically and practice-oriented project, has been dealing intensively with natural catastrophe risks, reinsurance, and risk steering. The focus is on connecting theoretical models with real market mechanisms and decision-making processes within the insurance industry.

As interview partner, Stephan Dorner was available, Managing Director and Founder of risk on mind as well as Management Consultant in the field of risk and insurance management. With over three decades of experience in the insurance industry – including senior roles in risk management at a European insurer – he has in-depth expertise in property insurance, natural perils, business interruption, and strategic risk management. Today, with risk on mind, he supports companies in analyzing, assessing, and reducing complex risks and helps them secure insurability in the long term.

The conversation is based on an open, in-depth professional dialogue and deliberately reflects a practical perspective. It combines market observations, experience, and critical assessments of current developments in the reinsurance environment – particularly in light of increasing extreme weather events, changing risk profiles, and rising demands for prevention and risk transparency.