The International Association of Insurance Supervisors (IAIS) released a special topic edition of its Global Insurance Market Report (GIMAR) assessing how natural catastrophe insurance protection gaps can affect financial stability. Drawing on six case studies combining historical events and forward-looking scenarios, the report links uninsured disaster losses to risks for the real economy and the financial system. The analysis finds that significant portions of natural catastrophe losses remain uninsured globally, with gaps particularly pronounced in emerging market and developing economy jurisdictions. The report highlights that widening protection gaps can increase financial stability risks, including by shifting more risk onto banks, while natural catastrophes can disrupt sectors such as agriculture, housing and infrastructure and create knock-on effects for employment, income and public finances. Insurance payouts, reinsurance and government-backed schemes can mitigate shocks where available, but uneven access across jurisdictions and the prospect of further reductions in coverage could increase systemic risk. The IAIS indicated it will continue work with members and partners to assess and address natural catastrophe protection gaps, with priorities including improved data collection, stronger global collaboration and practical guidance and knowledge sharing for policymakers and supervisors.

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