As natural catastrophes grow more frequent and intense, it is getting harder to access the buffer of reinsurance, according to a report by S&P Global Ratings.

An article in The Insurance Journal by Gautam Naik, reported that the reinsurance industry, which exists to help primary insurers cope with disaster, was shielding itself against the financial fallout of fires, floods, hurricanes and severe storms.

Global insured losses from catastrophe reached $135 billion in 2024 according to Swiss Re, while risk modeller Verisk predicted that this year, natural catastrophes will drive insured losses past $150 billion.

At least 19 reinsurers have reportedly slashed their exposure by more than half to insured catastrophe losses and will most likely continue on this track, carrying a reduced burden.

Simon Ashworth, the chief analytical officer at S&P Global did not expect the situation to reset anytime soon.

Big reinsurers had enough capital to handle insured losses equivalent to three Hurricane Katrinas in a single year, or about $300 billion, while maintaining their existing credit ratings, he said.

Mr Ashworth called this remarkable.

S&P Global said with primary insurers struggling under the weight of the costs they now faced, reinsurers were under mounting pressure to lower their prices and expand their coverage.

The credit ratings agency saw a moderate decline in rates, which Mr Ashworth thought would alleviate some of the pressure on primary insurers.

The Insurance Journal also said that the reinsurance industry covered more than 10 per cent of total insured catastrophe losses last year, compared with about 25 per cent in 2019 — well below the historical average of 20 per cent.

In August, Fitch Ratings said the reinsurance sector had moved beyond the peak of the hard market.

Fitch thought global reinsurers’ profitability was likely to remain robust into next year, but there were signs that the strong revenue growth of recent years was fading.

“Many reinsurers are increasingly selective, emphasising profitability over growth and refusing business that doesn’t meet tightened risk-return thresholds,” Fitch said. “Especially in United States property and casualty lines.”

Meanwhile, Moody’s Ratings expects reinsurers to cut their prices.