Climate risk, sustainability and the protection gap

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Climate change affects every instrument discussed in this chapter. Insured losses from natural catastrophes have exceeded one hundred billion US dollars in several recent years, according to Swiss Re's sigma reports, while the share of uninsured losses remains large, especially in developing countries.¹ Chapter I of this Part described the gap in the Swiss earthquake insurance, which shows that even rich countries leave large risks uninsured. Alternative risk transfer offers instruments to narrow such gaps, from catastrophe bonds sponsored by governments to parametric covers for communities and farmers. Investors who care about sustainability have shown interest in insurance-linked securities that finance the resilience of vulnerable regions.

Supervisors have begun to address climate risks in insurance. FINMA has published a circular on nature-related financial risks, which requires insurers and banks to identify and manage climate and other environmental risks according to their size and complexity. The Ordinance on Climate Disclosures, in force since 2024, requires large companies to report on climate matters in line with the recommendations of the Task Force on Climate-related Financial Disclosures.² For captives, these developments mean that their owners must consider whether the risks they retain will become more frequent or severe, and whether the commercial capacity above their retention will remain available at acceptable prices.

Notes

On insured and economic losses from natural catastrophes (insured losses above USD 100 billion in several years since 2017) and the protection gap, see Swiss Re Institute, sigma, natural catastrophe reports (various years). Figures to be verified. ↩
FINMA Circular 2026/1 "Nature-related financial risks" (published December 2024), and the Ordinance on Mandatory Climate Disclosures for Large Companies of 23 November 2022 (SR 221.434), in force since 1 January 2024. Circular number and status to be verified. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

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Climate risk, sustainability and the protection gap

Notes

Setting up or expanding in Switzerland?