With insured natural catastrophe losses in Europe rising by an average of 5% annually since 1980 and risks becoming increasingly complex, Munich Re warns against complacency following periods of lower losses. The reinsurer stresses that traditional reinsurance remains essential to providing reliable capacity and financial protection as insurers face mounting challenges from climate change, claims inflation, cyber threats and interconnected risks.

“Periods of lower losses in natural catastrophes (NatCat) must not lead to complacency about the risks ahead,” said Clarisse Kopff, Member of the Board of Management responsible for P&C Reinsurance in Europe and Latin America. According to Munich Re, insured NatCat losses in Europe have increased by an average of 5% annually since 1980, with growth accelerating over the past decade.

Traditional reinsurance capital continues to dominate alternative capital, with the ratio rising from 3.5 in 2017 to almost 4 in 2026. Munich Re stressed its ability to deploy additional capacity when markets face pressure, citing its support for Türkiye following the 2023 earthquake and rapid claims payments after Germany's 2021 floods.

Inflation remains another major challenge, particularly in motor insurance. In Germany, between 2017 and 2025, spare parts costs increased by an average of 6.1% annually and medical costs by 4.4%, while average premiums rose by only 2.2% per year. Munich Re is using AI-powered analytics to help insurers better assess these trends and price risks.

Cyber exposures are also becoming more complex, driven by artificial intelligence, geopolitical tensions and growing digital interdependencies. According to Munich Re's Global Cyber Risk and Insurance Survey 2026, 89% of companies consider themselves inadequately protected.

Meanwhile, climate change and increasing exposure continue to drive NatCat losses in Europe, where non-peak perils have accounted for approximately 70% of insured losses over the past two decades. Munich Re emphasized the importance of improved risk modeling, adequate pricing and greater investment in prevention and adaptation to limit future losses.