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Catastrophe reinsurance was once discussed mainly through peak events such as major hurricanes and earthquakes. Those risks remain capable of producing extreme losses, but the current market also has to manage a persistent flow of severe convective storms, wildfires and floods. These events are often described as secondary perils, yet their financial effect is no longer secondary for insurers.
Swiss Re Institute reported that secondary perils represented a record 92% of global insured natural catastrophe losses in 2025. The strategic implication is clear: catastrophe protection cannot be calibrated only around one remote peak scenario. It has to respond to repeated regional losses, changing exposure concentrations, higher reconstruction costs and the possibility that several events erode an annual programme.
For insurers, the challenge is to connect portfolio data, catastrophe modelling, claims experience and capital appetite. A well-designed programme should absorb volatility without transferring so much routine loss that the economics become unsustainable.
Secondary perils are difficult because they combine frequency with rapid changes in exposure and vulnerability. Urban expansion increases insured values in hazard-prone locations. Rooftop equipment, solar installations and lightweight construction can change damage patterns. Inflation, labour shortages and longer repair periods then increase the cost of each event.
The result is not simply a higher expected loss. It is a wider range of possible annual outcomes. A portfolio may experience several medium-sized events across different regions, or one dense urban loss that consumes a large share of the catastrophe limit. Reinsurers therefore require more granular location data, clearer occupancy information and a credible explanation of how values have been indexed.
Global contribution by weather-related peril, based on Swiss Re Institute sigma 1/2026.
Source attribution without external link: Swiss Re Institute, sigma 1/2026. Percentages describe contribution to historical loss growth, not a forecast for an individual portfolio.
Programme design should begin with the insurer's financial tolerance. Management needs to define the amount of loss that can be retained from one event, the aggregate volatility that can be absorbed during a year and the capital position that should be protected in a severe scenario. These questions determine whether the programme needs occurrence protection, an annual aggregate layer, reinstatements or a combination of structures.
Occurrence excess of loss protects against a defined event once losses exceed the retention. Aggregate protection can respond when multiple qualifying losses accumulate. A quota-share arrangement may support growth or reduce net exposure across a broader portfolio. Each structure solves a different problem, and combining them requires careful analysis of interaction, recoveries and cost.
Hours clauses, geographic boundaries and event definitions are operational provisions, not legal decoration. A storm system can produce wind, hail and flood losses over several days and jurisdictions. Wildfire losses may include multiple ignition points and changing containment lines. If the cedant and reinsurer aggregate claims differently, the dispute can affect both the timing and amount of recovery.
Before placement, the insurer should test historic events against the proposed wording. The exercise should show which claims fall inside the event window, how loss adjustment expenses are treated and when the retention is exhausted. Claims, underwriting, actuarial and legal teams should agree on the data required to support an event presentation.
Illustrative relative priority index for a 2026 renewal review.
Illustrative planning index only. Actual priorities depend on portfolio composition and capital objectives.
A programme that responds to the first event may leave the insurer exposed later in the season. Reinstatement provisions determine whether exhausted capacity can be restored and at what additional premium. The analysis should include a sequence of events rather than one modelled loss. It should also identify how paid, reserved and incurred losses affect the available limit.
Aggregate deductibles and limits can create similar complexity. They may be valuable when frequency is the main source of volatility, but the insurer needs reliable event coding and timely bordereaux. A structure that looks efficient in an actuarial model can become difficult to operate if claims data cannot be grouped consistently.
Reinsurers need time to understand material changes. A credible submission should explain portfolio growth, new territories, value inflation, underwriting actions, exposure reductions and lessons from recent claims. Model output should be accompanied by management interpretation, sensitivity tests and a reconciliation to the exposure database.
The Kompetenz helps insurers translate these elements into a coherent renewal strategy. We support programme modelling, market presentation, wording review, layer design and claims readiness. The objective is not simply to purchase catastrophe capacity, but to build a structure that remains understandable and effective across repeated events and a changing loss environment.
