An interview between Joe Phelan (Executive Director, Asia Pacific) and John Willis (Senior Director, Corporate Performance & Accountability)
JP: When you look at the global physical risk environment, does Asia‑Pacific warrant a distinct lens? What are risk experts including insurers and reinsurers saying?
JW: The global picture is relevant to APAC region, but APAC does exhibit some notable differences such as hazard mix, protection gaps, and the way resilience is financed. So the ‘same versus different’ comparison is important for Asia-based corporates. For discussions purposes, we group these similarities and differences into four main themes. These are: a persistently higher loss baseline with occasional spikes; who ultimately pays; price signals versus risk reality; and the governance & auditability for physical risk.
JP: Let’s run through these four themes and discuss what these mean for C-suites. Theme 1 you identify as a persistently higher risk floor, with occasional spikes. What is the global picture and how is APAC different?
JW: The key message globally is that the baseline has shifted upward: the ‘risk floor’ is persistently high, so there are fewer quiet years. Annual outcomes will still spike, but increasingly around a higher minimum loss level particularly as non‑peak/secondary perils and their accumulation effects shape results. What I mean by non-peak perils are higher frequency events such as severe thunderstorms, flooding, wildfires, landslides and heatwaves, rather than the widely reported tropical cyclones, tsunamis, typhoon storm surges, or earthquakes. For example, Munich Re estimated 2025 total losses at US$224bn with US$108bn as insured, and highlighted that non‑peak perils were major drivers.
WhereAPAC differs from this global overview is that the region is persistently multi‑peril. In several geographies, typhoon and flood risk co‑exist with earthquake and tsunami risk, raising the probability of compounding and related disruptions across assets and supply chains. Practically, corporates should stress‑test accumulation across sites and critical suppliers, not just last year’s claims.
JP: The second theme you highlight is who pays when things go wrong? I’m assuming this is a reference to the protection gap, insurability and affordability. What’s the global picture and how does APAC differ?
JW: Globally, the protection gap – by which we mean the difference between economic and insured losses – is material. For example, Swiss Re reported that in 2024 only 43% of economic losses (US$137bn out of US$318bn) were insured. At the same time, the Geneva Association, a think tank which is the only international association of insurance and reinsurance companies, warns that rising hazard, exposure growth and rebuilding costs threaten availability and affordability, making resilience measures increasingly important.
However, in parts of APAC, underinsurance is structural. Aon’s APAC insights noted around US$74bn of economic losses in 2024 with about US$4bn insured, implying around 95% uninsured. That shifts the CFO question from ‘Do we have cover?’ to ‘How do we fund the uninsured tail and what is our liquidity plan if a major event hits?’
In APAC, resilience is not primarily insurance-led but build on a broader system of resilience; 92% of losses remained uninsured in this region. As a result, many of these costs are absorbed by governments, businesses and households who collectively bear the cost. Governments frequently act as de facto insurers through reconstruction spending and relief initiatives. In advanced markets such as Japan and Singapore, adaptation measures play a greater role, with stronger building standards and infrastructure investments reduce losses ex ante. Together, these dynamics highlight that resilience in APAC is less about risk transfer and more about risk absorption and reduction.
JP: For the third theme, you referenced price signals versus risk reality. What are we seeing globally and in APAC?
JW: It might appear counterintuitive, but insurance pricing can soften even as hazard rises. This is evident at the moment. Fitch Ratings commented that record-high capital supply from traditional and alternative sources is again outpacing incremental demand, shifting pricing power towards buyers, most notably in property and, to a lesser extent, in specialty insurance. The lesson is that insurance premium movements should be treated as a signal, not a complete risk measure.
The Asia‑Pacific insurance market does not move as a single region. It behaves as a collection of distinct local markets with conditions diverging materially, with some markets, such as Japan, experiencing more moderate renewals while others face capacity constraints and tightening terms. Where temporary softening does emerge, the priority should be to use that window to improve program structure rather than simply reduce price. This includes clarifying policy definitions, optimizing aggregate limits and reinstatements, and restructuring coverage. Programs can then be strengthened by layering different sources of risk financing, combining traditional indemnity insurance with solutions that provide faster access to cash following an event. For example, the World Bank’s Southeast Asia Disaster Risk Insurance Facility (SEADRIF) facility is a pre‑arranged disaster finance structure designed to deliver payouts quickly once impact thresholds are met. Corporates can apply the same logic through parametric triggers, contingent credit and other balance‑sheet solutions, ensuring liquidity arrives quickly, not months later.
JP: The fourth and final theme you referenced was the governance & auditability for physical risk which presumably covers scenario analysis and supervisory expectations. What is your global and regional view?
JW: There is global convergence on governance, scenario analysis and disclosure discipline for climate‑related risk. The International Association of Insurance Supervisors (IAIS), the global standard‑setting body for insurance regulation and supervision, has reinforced supervisory expectations for climate risk management in the insurance sector, and large insurers are standardizing around TCFD/TNFD style reporting and scenario practices.
APAC supervisors are moving from ideas to action. Singapore’s MAS has explicit environmental risk management guidance, and other supervisors are running stress tests and building capability. In Hong Kong, the HKMA has supported a Physical Risk Assessment Platform to build banks’ physical‑risk assessment capacity. For corporates, the watchword is ‘auditability’ namely board oversight, scenarios, and consistent disclosures to reduce friction with lenders and insurers.
JP: So, when looking at the APAC region which hazards should directors pay particular attention to?
JW: There are two main ones.Firstly, there is extreme heat, because it hits labour productivity and health, and in cities the urban heat island effect can add several degrees on top of global warming. Secondly, coastal flood risk requires monitoring because exposure is concentrated and peer‑reviewed work estimates expected annual coastal flood damages of about US$26.8bn today across Asia‑Pacific, rising to roughly US$143.7–$197.8bn by 2050 without additional adaptation. These two hazards push adaptation finance to the top of the agenda.
JP: Finally, what does ‘good’ look like to insurers and capital providers? What actions should CFO, CROs – and corporates more broadly – take?
JW: For insurers and capital providers, ‘good’ means showing clear risk reduction and having wellfunded resilience plans. This includes documenting how resilience investments reduce downtime and support cash flow, and ensuring the riskfinancing stack is effective under stress. Tools like resilience scoring help make these improvements visible to insurers and lenders.
For corporates, this is a crossfunctional agenda. CFOs and CROs should maintain an exposure register and run multiyear scenarios for key hazards, use insurance as a price signal, and create a layered riskfinancing plan for rapid response, while allocating budget for resilience investments and tracking benefits through reduced downtime and volatility. CSOs play a critical role in building visibility across the value chain, translating physical risk into strategic priorities, and ensuring resilience actions are embedded into business planning rather than treated as a standalone sustainability issue. Linking risk reduction, funded plans and structured financing helps attract insurers and capital providers while strengthening realeconomy resilience.
Contacts:
APAC community: hu@wbcsd.org
Singapore: phelan@wbcsd.org
London: willis@wbcsd.org
Sources:
[1] Munich Re – Natural disaster figures for 2025 (2026-01-13)
[2] Swiss Re – How big is the protection gap from natural catastrophes where you are? (interactive tool) (2023-03-22)
[3] Swiss Re Institute – sigma 1/2025: Natural catastrophes: insured losses on trend to USD 145 billion in 2025 (2025-04-29)
[4] Aon – 2026 Climate and Catastrophe Insight (2026)
[5] Gallagher Re – Natural Catastrophe and Climate Report 2025 (2026-01)
[6] WTW – Natural Catastrophe Review January 2026 (2026-01-28)
[7] Willis Re – Natural Catastrophe Review January 2026 (2026-01-29) —
[8] Howden Group Holdings – Re-balancing: 1.1.26 reinsurance renewals report (2025-12)
[9] Howden / BCG / High-Level Climate Champions – The Great Enabler (2024-11)
[10] Howden Re – Howden Re’s outlook at 1.4.25 (2025-04-01)
[11] Marsh – Global Insurance Market Index: Q2 2025 (2025) —
[12] Arthur J. Gallagher – Insurance Market Report May 2025 (PDF) (2025-05)
[13] Rajah & Tann – MAS: Guidelines on Environmental Risk Management (Banks/Insurers/Asset Managers) – legal summary (2020-12) —
[14] Monetary Authority of Singapore (via IMF) – Climate Scenario Analysis in MAS’ Industry‑Wide Stress Test (2022-12-06)
[15] Hong Kong Monetary Authority – Guidelines for Banking Sector Climate Risk Stress Test (2023-04)
[16] Bank Negara Malaysia – Climate Risk Management and Scenario Analysis (updated policy document ) (2025-03-17)
[17] IAIS – Application Paper on the supervision of climate-related risks in the insurance sector (press release) (2025-04-16)
[18] Japan Financial Services Agency – Practices and Issues on Climate-related Risk Management (2025-06-20)
[19] ASEAN Secretariat – Disaster Risk Financing and Insurance in Southeast Asia: Trends, Challenges, and Strategic Approaches (2025-04)
[20] World Bank – From Risk to Resilience: Strengthening Financial Preparedness in Southeast Asia (SEADRIF feature) (2026-02-11)
[21] Insurance Development Forum – Increasing Insurability to Close Protection Gaps (2025-11)
[22] The Geneva Association – Safeguarding Home Insurance: Reducing exposure and vulnerability to extreme weather (2025-05)
[23] Tokio Marine Holdings — Climate & Nature Report 2025 (2025)
[24] Sompo Holdings — Response to TCFD and TNFD (2024)
[25] MS&AD Insurance Group — MS&AD TCFD/TNFD Report 2025 (Green Resilience Report) (PDF) (2025)
[26] IFC / QBE – IFC and QBE Insurance Team Up to Drive Building Resilience in Asia Pacific (press release) (2025-06-12)
[27] Suncorp – Responding to climate change (2024)
[28] Suncorp – FY24 Climate-related Disclosures Report (PDF) (2024-08-19)
[29] Fubon Financial Holdings – Climate-related Financial Disclosures Report 2024 (2024)
[30] Cathay Financial Holdings – Climate and Nature Report 2024 (PDF) (2024)
[31] Aon – APAC insights: Q1 2025 Global Catastrophe Recap (13 May 2025)
[32] APRA – Insurance Climate Vulnerability Assessment (2024-12-05)
[33] UN ESCAP – Asia-Pacific Disaster Report 2025: Rising Heat, Rising Risk (2025-11-26)
[34] Asian Development Bank – Asia-Pacific Climate Report 2024: Catalyzing Finance and Policy Solutions (2024-10)
[35] Monioudi, I.N., Vousdoukas, M.I. et al. – Impacts of sea level rise and adaptation across Asia and the Pacific (2025-10-13)
[36] Hong Kong Monetary Authority – Physical Risk Assessment Platform: Formal Version (2025-07-10)
[37] UNEP Finance Initiative – Climate-related risks in financial regulation and supervision in APAC: A policy landscape analysis (2025-06)
