Global Insurance Market Sees Strong Recovery Amid Rising Demand for Climate Coverage
The global insurance market is experiencing a stronger-than-expected recovery in 2025 as demand rises for climate-related risk protection, according to a new report by the International Insurance Association (IIA). Industry analysts say that after years of unpredictable losses driven by extreme weather events, insurers are finally stabilizing through revised pricing models and expanded premium categories targeted at environmental risk.
According to the report, global insurance premiums grew by an estimated 6.4% in the last fiscal year, driven mainly by property and casualty insurers adjusting to higher climate-risk projections. With storms, floods, and wildfires increasing in frequency across multiple continents, households and businesses have started purchasing broader coverage to protect assets.
In North America and Europe, insurers introduced new micro-coverage products for flash floods, heat-wave-related damages, and renewable-energy infrastructure. The report shows these new products accounted for nearly 18% of all new premium growth. Analysts expect this trend to accelerate as governments enforce stricter environmental regulations.
Meanwhile, developing markets, especially in Africa and Southeast Asia, have become key drivers of insurance adoption. Rising urbanization, combined with growing awareness of financial risk, has pushed millions of previously uninsured individuals into the insurance system. Nigeria, Kenya, Vietnam, and the Philippines recorded some of the highest adoption rates.
However, industry executives warn that the sector still faces structural challenges. Profitability remains pressured by high claim ratios and costlier reinsurance contracts. Many insurers are also investing heavily in artificial intelligence systems to detect fraud and automate claims processing.
Digital transformation remains a top priority. More than 70% of insurers globally have launched mobile-first policies that allow customers to purchase coverage, file claims, and receive payouts using digital wallets. This shift has been particularly significant in Africa, where mobile money penetration is high.
The IIA report concludes that the insurance industry is entering a period of transformation where climate adaptation, digital infrastructure, and expanded micro-insurance will shape growth patterns for th
e next decade.