A new report has urged governments and the (re)insurance industry to do more to look to new solutions for the rising risks posed by natural and man-made perils.

In a new report The Geneva Association has examined the role of public-private insurance programmes (PPIPs). Working from a three-pillar framework to narrow protection gaps – investing in risk reduction, strengthening private insurance markets, and using PPIPs as targeted risk-sharing mechanisms – the report analyses 14 existing PPIPs.

It found that while many programmes have successfully stabilised markets or expanded coverage, persistent challenges include heavy financial liabilities, crowding out private-sector players, and – most importantly – insufficient incentives for risk reduction.

The association added: “From floods and fires to cyberattacks and pandemics, natural and man-made disasters are becoming more frequent, more costly, and harder to absorb – exposing the limits of traditional insurance and post-crisis government relief.

“With uninsured losses mounting and public budgets under strain, policymakers and industry leaders face an urgent question: how can societies maintain affordable, reliable protection as disaster risks intensify?”

Jad Ariss, managing director of the Geneva Association, said: “Public-private insurance programmes can’t just be passive shock absorbers that pay out after disaster strikes. To remain viable in a world of escalating risks, they must become resilience engines – reinforcing prevention, strengthening incentives to reduce exposure, and helping societies recover faster with less pressure on public budgets.”

He added: “In recent decades, societies have grown more prosperous, more interconnected, and, paradoxically, more vulnerable. Natural and man-made disasters now unfold against a backdrop of dense economic activity, stretched public finances, and rising expectations of protection.

“In this environment, insurance is a cornerstone of resilience, helping households, businesses, and governments absorb shocks and recover more quickly. Yet the frequency, scale, and sometimes systemic nature of today’s risks – and urgent need to address insurance availability and affordability challenges – are testing the limits of existing mechanisms and forcing a reassessment of how risk is reduced, shared, and ultimately borne.”

Ariss said while PPIPs have succeeded in restoring or increasing coverage where private markets alone could not. However, too frequently, they have functioned as passive shock absorbers rather than as part of a broader strategy to reduce risk.

“Maximising protection for society over time requires a shift from financing disasters to proactively managing risk,” he continued. “Governments must prioritise investment in risk reduction, strengthen private insurance markets, and deploy PPIPs strategically where private capacity is missing, rather than viewing them as substitutes for prevention. PPIPs, when well designed and aligned with national resilience strategies, can do more than share losses after disasters: they can reinforce incentives to reduce risk, protect public finances, and support faster, fairer recoveries. The recommendations set out here aim to support policymakers in making that transition, at a moment when the growing cost of inaction is becoming ever clearer.”

The report said a well-designed PPIP effectively navigates four guardrails, namely:

• Ensuring fair access to coverage at affordable prices (social guardrail)
• Protecting public finances and making the state a reinsurer of last resort (fiscal guardrail)
• Encouraging private-insurance participation, ensuring the industry bears a sustainable level of risk (market guardrail)
• Paying claims quickly (operational guardrail)

Hélène Schernberg, director public policy & regulation at the Geneva Association, added: “PPIPs are complex to design and can be costly for governments. Policymakers therefore need a structured decision process: substantiate the protection gap, exhaust risk-reduction measures and enhancements to private insurance markets, define the exposures that warrant intervention, and make an explicit fiscal case for the residual risk the state is willing to absorb.”