The maritime industry is undeniably the backbone of global trade, connecting markets and ensuring the flow of goods worldwide. Equally undeniable, however, is the challenge posed by natural catastrophic events such as earthquakes, tsunamis and hurricanes to insurers and to our society. These disasters, though devastating, are well-studied within the insurance sector. Yet, a quieter but increasingly significant threat has emerged in recent years: the so-called non-peak perils, sometimes also named secondary perils.
While peak perils, such as extreme hurricanes and earthquakes, are clearly responsible for the significant volatility in the scale of losses, the non-peak perils are driving the trend toward increasing insured losses. Research clearly indicates that climate change has an impact – in some cases a significant one – on the number and severity of these natural hazards.
Non-peak perils refer to localised natural hazards such as flash floods, floods, wildfires, hailstorms, and severe thunderstorms with tornadoes. These hazards are no longer rare, isolated occurrences. Their growing frequency and severity have become a pressing concern for the insurance industry—and marine insurance is no exception. These risks, fueled by the intensification of climate change require insurers to rethink traditional underwriting models.
Over the past decade, we have witnessed a cascade of extreme events that illustrate the growing weight of non-peak perils. Wildfires in California (2018), Australia (2019), and Greece (2018-2023) have caused extensive losses, both human and financial. Severe thunderstorms across the United States have reached a level of annual losses in the magnitude of a severe hurricane, and flash floods in Germany and Spain (2023–2024) disrupted communities and industries alike.
These events have caused billions of dollars in damage to infrastructure, derailed supply chains, and led to prolonged business interruptions.
Latin America, often identified as one of the most vulnerable regions to natural disasters, provides a striking example of the challenges posed by non-peak perils. In 2023, droughts in Panama significantly disrupted operations at the Panama Canal, reducing the number of daily vessel transits from 38 to 28. This bottleneck not only delayed global shipping schedules but also generated an estimated revenue loss of USD 500 million for the canal—a stark reminder of how localised environmental changes can ripple across global trade.
In 2021, the Paraná River in South America, a critical trade artery in the La Plata Basin, dropped to its lowest level in 77 years, halting barge traffic and disrupting economies in Uruguay, Argentina, and Brazil. Conversely, just three years later, southern Brazil faced catastrophic flooding in Rio Grande do Sul, displacing nearly 580,000 people and causing severe economic damage.
The tricky aspect of non-peak lies in their unpredictability, as they – like flash floods – can virtually happen everywhere. For many non-peak perils, i.e. floods, the insurance gap remains strikingly high, even in industrialised countries, but of course dramatically more pronounced in emerging economies. These events frequently occur in areas unaccustomed to such risks, leaving insurers with limited data and experience to manage or model them effectively.
Once considered marginal, secondary perils have become central to the evolving risk landscape of marine insurance. To ignore their rise is to risk falling behind in an era of rapid climatic and environmental change. For the insurance industry, embracing proactive strategies to understand, mitigate, and underwrite these emerging threats is no longer optional—it is an imperative.