Draft, not yet released. In stewardship review. Not indexed until the first approved release.

Large insured loss that meets soft pricing and thin backstops

A conditional statement under stated assumptions, never a prediction.

2 min read0 figures0 tables2 notesNR-STRATEGIC-INSURANCE-GLOBAL-2026-BASELINE

Contents
  1. ·Edition home
  2. ·Executive summary
  3. 1Protection gaps are shared risk
  4. 2Key findings
  5. 3Systems and sectors at baseline
  6. 4Risks and capability
  7. 5Large insured loss that meets soft pricing and thin backstops
    1. 5.1 Assumptions
    2. 5.2 The cascade, step by step
    3. 5.3 The scenario as a table of steps
  8. 6Readings from the other desks
  9. 7The 2027 agenda
  10. 8Systems in depth
  11. AMethodology
  12. BData appendix
  13. CReferences and record
  14. ·Complete edition, for print

5.1Assumptions

Scenario SCN-SR06-LOSS-01: what is assumed, and what is held constant.

Baseline
the 2026 reference state in this edition
Drivers
a large US wildfire, storm or hurricane loss after a year of falling reinsurance rates
Analogues
Los Angeles wildfires, 2025; reinsurance renewals, January 202612
Interventions
none modelled: the specification describes the unmitigated case
Run state
narrative specification; quantified run scheduled for 2027

5.2The cascade, step by step

  1. 1

    CLI → FIN

    a large insured loss lands on insurers and reinsurers

    2025

  2. 2

    FIN → FIN

    insurers raise prices and cut cover in high-risk areas

    2018 to 2022

  3. 3

    FIN → FIN

    residual markets take more policies and more exposure

    2026

  4. 4

    INF → FIN

    a short-dated public flood scheme approaches a deadline

    2025 · 2026

  5. 5

    FIN → DEV

    public budgets absorb uninsured loss

    2025

  6. 6

    FIN ↔ TRD

    reinsurance prices reset at the next renewal

    2026

5.3The scenario as a table of steps

How the shock in scenario SCN-SR06-LOSS-01 would travel through Insurance, Protection Gaps and Insurability’s coupled systems, step by step, under the assumptions the edition states.

StepWhat happensSource
01 Climate to financeA large insured loss lands on insurers and reinsurers. Analogue or source: 2025.Edition SR-06, scenario SCN-SR06-LOSS-01, step 1
02 Finance to financeInsurers raise prices and cut cover in high-risk areas. Analogue or source: 2018 to 2022.Edition SR-06, scenario SCN-SR06-LOSS-01, step 2
03 Finance to financeResidual markets take more policies and more exposure. Analogue or source: 2026.Edition SR-06, scenario SCN-SR06-LOSS-01, step 3
04 Infrastructure to financeA short-dated public flood scheme approaches a deadline. Analogue or source: 2025 · 2026.Edition SR-06, scenario SCN-SR06-LOSS-01, step 4
05 Finance to developmentPublic budgets absorb uninsured loss. Analogue or source: 2025.Edition SR-06, scenario SCN-SR06-LOSS-01, step 5

A teaching model of a conditional scenario under the edition’s stated assumptions: not a forecast, not a prediction and not a warning. Sources: Insurance, Protection Gaps and Insurability 2026, scenario SCN-SR06-LOSS-01 (2026); Insurance, Protection Gaps and Insurability 2026, references (NR-CIT-1) (2026).

Notes

Numbers are the edition’s reference numbers, so a note reads the same in every chapter. The full list, with every source and its licence, is in Annex C. Annex C, references

  1. 1Insurance Journal and Reinsurance News (eds.), reports of Swiss Re Institute, sigma 1/2026, Natural catastrophes in 2025: the persistent rise of wildfire and storm risk (insured losses USD 107 billion; economic losses USD 220 billion; 92% from secondary perils; Los Angeles wildfires USD 40 billion; trend 5% to 7% a year; 2026 normal level USD 148 billion and peak scenario about USD 320 billion), articles of March 2026. The sigma report itself was not opened; the Swiss Re page returned an access error. Observation year 2025. Accessed 2026-11-03.back
  2. 2Insurance Journal, Insurance Business and Reinsurance News (eds.), reports of Munich Re, natural disaster losses in 2025, 13 January 2026 (overall losses about USD 224 billion; insured about USD 108 billion; Asia-Pacific about USD 73 billion overall and USD 9 billion insured; Africa about USD 3 billion; January 2026 reinsurance rates down 14.7%). One article printed USD 244 billion for overall losses, a typographical conflict with USD 224 billion elsewhere. The Munich Re release was not opened. Observation year 2025. Accessed 2026-11-03.back

Cite this chapter

Valadbaygi, S. (Ed.). (2026). Chapter 5: Large insured loss that meets soft pricing and thin backstops. In Strategic Systems Report 2026: Insurance, Protection Gaps and Insurability (Baseline Edition 2026, Report No. NR-STRATEGIC-INSURANCE-GLOBAL-2026-BASELINE) [Draft under review]. The Global Centre for Risk and Innovation (GCRI).

Every citation form of the whole report, BibTeX and RIS included, is on the edition home. Cite this report

ReportsContribute

Send evidence or a correction on Insurance, Protection Gaps and Insurability.

Reports is the Consortium’s quarterly publication, written by six desks. This page sits with the Global Centre for Risk and Innovation (GCRI) Systems Evidence desk. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work. Sent to the wrong desk, it is forwarded, not refused.

GCRI Systems Evidence deskStrategic Systems

Never send personal data, sensitive infrastructure detail or anything you have no right to share. A contribution is reviewed before use; sending it confers no authorship or editorial rights, and sponsorship never buys a finding.

CC BY 4.0 Free to read. Text and figures: CC BY 4.0. Data: CC0 1.0. Authors keep copyright. Published by GCRI Canada.

The Global Centre for Risk and Innovation

Science · evidence · measurement

Not for profit

Our articles, maps and twins are free to read and free to republish. Readers and partners keep it that way.

Partner with us

Who funds us

GCRI is a not-for-profit institution. To ask who funds a piece of work, use the funding questions form.

Independence

Editors and the expert reviewers named on each article decide what we publish. Funders and partners do not review or approve articles before publication.

Corrections policy

Licence

Articles: CC BY 4.0. Figures, maps, twins and data: CC BY 4.0. Other uses: ask through the permissions form.

Privacy choices