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Moody's warns a single US mega-cat could leave a $700B protection gap
Moody's says 57.8% of global catastrophe losses since 2015 have gone uninsured, pointing to a structural capital shortfall.
Catastrophe losses are rising faster than the insurance industry can absorb them, and closing the protection gap will likely require a larger role for capital markets, according to a new interactive data analysis published by Moody's.
Moody's estimates that 57.8% of global catastrophe losses since 2015 have gone uninsured, meaning more than half of natural-disaster damage over the past decade has landed on governments, businesses, and households rather than insurers.
In a US one-in-200-year scenario, Moody's projects $1.1 trillion in total losses and a $700 billion protection gap, compared with approximately $785 billion in total global reinsurance capital.
The analysis notes that such an extreme event would not necessarily end the reinsurance industry, but it could consume nearly all available reinsurance capital, leaving limited capacity for subsequent disasters or routine business.