MAPFRE warns of widening insurance gap as climate-related disasters surge amid global push for resilience

Economic losses from extreme weather events are escalating at an alarming rate, with insured losses increasing annually by 5 to 7 percent, according to a recent report presented by MAPFRE Economics at COP30 in Brazil. The report, titled Climate Change: Extraordinary Risks and Public Policies, highlights the intensifying impact of natural disasters such as fires, droughts, heatwaves, and flooding, which now constitute the most significant sources of economic and social damage globally.

A striking concern underscored by the report is the widening gap in global insurance protection against natural catastrophes. Asia suffers the most considerable shortfall, with 82.8 percent of natural disaster losses uninsured, followed closely by Latin America at 81 percent. North America has the lowest insurance gap at 43.2 percent but still faces rising threats from cyclones, winter storms, and wildfires. These disparities are attributed to lower insurance penetration in emerging markets, expanding populations in high-risk areas, and the increasing frequency and severity of extreme weather events driven by climate change.

Secondary perils such as wildfires, heatwaves, floods, and storms now contribute to more than half of all disaster losses. In 2024 alone, climate-related catastrophes resulted in over USD 300 billion in economic damages for the ninth consecutive year, although only about USD 145 billion of these losses were insured. Ricardo González, Director of Analysis, Sectorial Research and Regulation at MAPFRE Economics, emphasised that these rising insured losses are influenced not only by climate change but also by economic growth and increased development in vulnerable areas. Europe, noted González, experienced a record number of natural disasters in 2023, underscoring its status as the fastest-warming continent worldwide.

The report makes a compelling case for enhanced collaboration between insurers and public authorities to address the natural catastrophe insurance gap. MAPFRE advocates for stronger risk-management frameworks and compensation mechanisms to ensure that certain climate risks do not become uninsurable. Prominent examples of effective public-private cooperation, such as Spain’s Insurance Compensation Consortium, serve as models for tackling these challenges. The organisation also promotes the broader adoption of innovative prevention tools, including early-warning systems, risk-reduction incentives, and parametric insurance products, policies that automatically pay out when predetermined climatic thresholds are met, such as specific wind speeds or rainfall amounts.

In line with these priorities, MAPFRE is pushing forward ambitious climate commitments. Mónica Zuleta, MAPFRE’s Group Head of Sustainability, reiterated the company’s pledge to achieve carbon neutrality across all operations by 2030 and to reach net-zero emissions in its insurance and investment portfolios by 2050. MAPFRE’s broader sustainability strategy, detailed in its 2022 and 2023 TCFD reports, also encompasses the integration of environmental, social, and governance (ESG) factors into business decision-making. The insurer is part of the Net-Zero Insurance Alliance (NZIA) and is focusing on the development of sustainable insurance products that support decarbonisation and climate adaptation efforts, such as coverage tailored for renewable energy initiatives, electric mobility, and regenerative agriculture.

Further initiatives unveiled at COP30 include MAPFRE’s investment in parametric insurance solutions through a partnership with Blue Marble, the issuance of catastrophe bonds, and the launch of the MAPFRE Renewable Energy II Fund, which concentrates on biomethane projects. The company has also introduced Bioseguro, a programme that benefits post-disaster reforestation and natural regeneration while generating carbon credits.

The urgency of such integrated responses to climate risk is echoed in broader industry reports, such as Gallagher Re’s 2025 Natural Catastrophe and Climate Report, which calls for intensified public-private partnerships and enhanced climate finance to bolster resilience and close financing gaps for developing nations. Aligning with global climate goals, including the Paris Agreement, MAPFRE’s approach encompasses collaborative efforts with organisations like The Geneva Association to build a more resilient, low-carbon economy.

With climate change posing a critical threat to global stability and the insurance sector itself, MAPFRE’s comprehensive report and its ongoing environmental commitments reflect a growing recognition that safeguarding against natural disasters requires not only advanced insurance mechanisms but also systemic collaboration between governments, insurers, and other stakeholders worldwide.