The property insurance market is undergoing significant change due to the rising frequency and severity of weather events, urbanisation, and shifts in land use, according to an inaugural report from Global Insurance Law Connect (GILC).
In the report, it is outlined that the escalating cost of catastrophes is placing pressure on insurance markets globally, affecting both insured and uninsured losses.
Gillian Davidson (pictured above), chair of GILC, said, “Our new property catastrophe report captures the urgency of the protection gap challenge. As climate-driven perils intensify, insurers, governments and property owners are all grappling with the affordability and availability of insurance, particularly in high-risk areas. Building resilience is not just a technical challenge, but a societal imperative.”
The report notes that higher claims and economic losses are resulting in tighter policy wordings, more exclusions, and, in some cases, insurers withdrawing from high-risk regions. Governments are responding with regulatory reforms to help maintain insurability and protect affected communities.
Despite these pressures, the report observes progress in the form of clearer policy language, incentives for risk mitigation, and the use of co-insurance and parametric insurance solutions. These approaches are designed to enable faster recovery after catastrophic events.
Parametric insurance, catastrophe risk pools, and technology-based risk assessment tools are identified as important mechanisms for narrowing the protection gap. These innovations allow for quicker claims settlement, coverage for difficult-to-insure events, and increased certainty for policyholders.
In line with these findings is a shifting property landscape as rates have started to decline in 2025, with the index from Marsh showing an 8% fall in the third quarter. This drop is attributed to a relatively quiet year for natural catastrophes and increased competition among insurers, leading to a softening of premiums after several years of sustained increases.
Despite this trend, high-risk properties in the UK continue to face careful underwriting scrutiny and capacity constraints. Insurers are encouraging risk management improvements, such as the installation of sprinkler systems and the reduction of high-risk materials, to help maintain insurability and manage exposure in areas vulnerable to floods, fires, and other hazards.
“The growing collaboration between all parties worldwide offers real hope that we can proactively manage natural disaster risk while maintaining the financial stability of communities and markets,” Davidson said.
