Kathmandu. As 2025 draws to a close, the global reinsurance market has transformed from a financial instrument to a critical component of economic resilience.
Rising climate-related disasters, geopolitical uncertainty and post-pandemic volatility have pushed insurers to their limits. This has made reinsurance a critical component to safeguarding both the insurance system and the macroeconomic stability.
According to the International Association of Insurance Supervisors (IAIS), the global reinsurance market is expected to reach around $1.75 trillion by the end of 2025. This provides a clear and complete picture of the scale and importance of the region.
Nearly a quarter of global insurance premiums are now transferred to reinsurance companies. This reflects the inability of primary insurers to place increasingly complex and serious risks on their balance sheets.
This change is driven not only by expansion, but also by improved transparency. The IAIS’s System-Wide Monitoring (SWM) reinsurance component and the Global Reinsurance Market Survey (GRMS) cover the United States as a whole. This has expanded the data coverage, revealing the true size of the market. As a result, premium growth in recent years reflects both structural growth and more accurate reporting. With net reinsurance premiums exceeding $1.2 trillion, reinsurance companies are taking significant risks instead of simplifying risk transmission.
Regionally, the U.S. leads the global market, reflecting high catastrophe risk, strong corporate insurance demand, and advanced capital market risk transfer mechanisms. In addition, deeper participation from Asia, Europe, and the Middle East has diversified the reinsurance market, increased flexibility, and reduced regulatory complexity.
Financially, the reinsurance sector is in a strong position for 2025. Reinsurance companies ended the end of 2024 with a strong liquidity position, backed by disciplined underwriting and conservative investment strategies. The high risk of high-quality corporate debt has ensured stable cash flow. However, selective choice in equities and alternative assets has supported long-term returns.
The combined ratio in non-life reinsurance has stabilized at around 95%. This indicates improved pricing discipline and cost control after the volatility of recent years.
While the reinsurance market is strong, sustainability remains a significant challenge. Climate change is increasing the deficit. Interest rate uncertainty and financial market volatility are putting pressure on capital and income. Against this backdrop, responsible risk acceptance, transparent reporting, and strong capital management will determine whether the reinsurance sector can sustain its growing role.
