At the Geneva Association’s Climate Change and Environment Conference this week, Swiss Re CEO Andreas Berger issued a compelling call for the insurance and finance industries to fundamentally rethink their role in addressing climate risk.
Speaking before a global audience of policymakers, insurers, and sustainability leaders, Berger urged a decisive move “from pure risk transfer to real risk transformation.”
Citing Benjamin Franklin’s adage that “an ounce of prevention is worth a pound of cure,” Berger said the principle must now become a mainstream practice across economies facing escalating extreme weather losses.
“Our challenge is to turn this maxim into mainstream practice, a shift from pure risk transfer, as we traditionally know it, to true risk transformation,” said Berger.
Berger cited the transformation of New Orleans following Hurricane Katrina in 2005 as a landmark example. The US government invested $14.6 billion in levees, pumps, and flood walls, alongside stronger land-use and building codes. When Hurricane Ida struck in 2021, the system “passed its first major test,” preventing catastrophic flooding, he said.
“Prevention works,” Berger added. “Targeted prevention dramatically reduces loss of life and damage to property and infrastructure.”
He also underscored that natural catastrophe losses are growing by 5-7% annually in real terms, driven by climate change and urban concentration in high-risk zones. Swiss Re Institute data showed global economic losses from disasters in 2024 totalled an estimated $318 billion, with insured losses covering only $137 billion, leaving a protection gap of 57%, or $181 billion.
“These are not abstract figures,” Berger said. “They represent disrupted households, strained public finances, and delayed reconstruction of schools and infrastructure.” He cited cascading economic effects from local disasters as evidence of the need for systemic resilience.
His message comes amid a sense of urgency as the Caribbean reels from Hurricane Melissa’s catastrophic landfall in Jamaica. Preliminary estimates from Moody’s have put economic losses from the storm in the tens of billions of dollars, far exceeding insured losses due to low insurance coverage and widespread underinsurance across Jamaica.
According to the Insurance Association of Jamaica (IAJ), only about 20% of residential properties on the island are insured, and 95% of those are underinsured, which means coverage would not fully cover rebuilding costs in the event of total loss. High insurance premiums, limited financial literacy, and widespread informal construction practices all contribute to low insurance uptake.
Even as prevention improves, population growth and asset accumulation in high-risk zones threaten to outpace gains in resilience. According to Berger, loss prevention must go hand in hand with smarter urban planning and land use to avoid high-risk areas and maintain insurability.
Public-private partnerships (PPPs), he argued, play a crucial role. “PPPs can expand insurance affordability and accelerate payouts without distorting risk signals,” Berger said. But he cautioned that “there’s no one-size-fits-all model. In mature markets, they should complement, not replace, private mechanisms.”
Berger pointed to Swiss Re’s collaboration with the City of Fremont, California, which recently became the first US municipality to buy citywide flood coverage. Another success story is the UK’s Flood Re scheme, which makes flood insurance affordable and funds home adaptation projects.
According to Swiss Re Institute research, “the economic benefits of flood adaptation can be up to ten times the cost of post-disaster rebuilding.” Berger added: “It simply makes sense to invest where prevention delivers outsized value.”
Looking ahead, Berger emphasized the transformative role of artificial intelligence.
“We’ve worked with AI and machine learning for over 15 years,” he said. Swiss Re now uses generative AI and digital twin models for predictive policy planning, simulating floods, heat waves, or rising sea levels to guide capital expenditure and urban design.
He noted ongoing work with the US government on “first response optimization,” using AI to improve disaster response and supply chain resilience.
“But AI must be used responsibly. Data can be biased, algorithms can be biased. Human oversight remains essential.”
