The insurance industry has been told it has a critical role to play in shaping a more resilient and sustainable future.

Global Insurance Law Connect (GILC), an alliance of international law firms made the plea in its inaugural Property Catastrophe and Climate Governance Report, which collated insights from its 23 member firms across the globe.

The study explores the rapidly evolving landscape of natural catastrophe (nat cat) risks, the challenges facing property owners and insurers, and the innovative solutions required to bridge the growing protection gap.

Key themes emerging from the report include the mounting impact of climate change on insured and uninsured losses and the vital role of government schemes and insurance innovation in building resilience.

The report underscored the transformation underway in the property insurance market, driven by the increasing frequency and severity of weather events, urbanisation, and changing land use. It highlights how the escalating cost of catastrophes – both insured and uninsured – is putting significant strain on markets worldwide.

Gillian Davidson, Chair of GILC, explained: “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 highlighted how rising claims and economic losses are leading to tighter policy wordings, increased exclusions, and in some cases, market withdrawals from high-risk territories. Governments are increasingly stepping in with regulatory reforms to maintain insurability and protect communities.

Despite these pressures, the report found encouraging developments, including clearer policy language, greater incentives for risk mitigation, and the adoption of co-insurance and parametric solutions that enable faster recovery following catastrophe events.

Parametric insurance, catastrophe risk pools and technology-driven risk assessment tools are highlighted as key mechanisms for closing the protection gap. These innovations offer faster claims settlement, coverage for hard-to-insure events, and greater certainty for policyholders.

“The overarching message of the report is clear: the insurance industry has a critical role to play in shaping a more resilient and sustainable future,” The study explained. “By fostering collaboration, incentivising risk mitigation and embracing innovation, insurers can help communities withstand and recover from natural disasters.”

Davidson concluded: “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.”