As the world faces mounting climate and development challenges, the insurance sector finds itself at a crossroads. On March 3, 2026, two major reports—one from Convergence and the Global Asia Insurance Partnership, and another from Berkshire Hathaway—shed light on how the insurance industry is both shaping and being shaped by global financial pressures, risk management demands, and evolving market realities.
Demand for capital to tackle climate change and development hurdles has never been higher, yet the ability to attract private investment remains stubbornly constrained. One crucial reason? According to a recent playbook by Convergence and the Global Asia Insurance Partnership, the insurance sector’s involvement in blended finance transactions is still minimal, even when risk is at the very heart of deal design. This limited engagement is holding back both deal quality and progress in mobilizing capital for vital infrastructure and climate projects.
“Blended finance will not reach the scale required to meet climate and development goals without a more deliberate and systematic integration of the insurance sector,” wrote Andrew Apampa, Associate Director at Convergence, and Min Hung Cheng, CEO at Global Asia Insurance Partnership. Their analysis points to the insurance industry’s unique ability to serve as risk advisors, providers of insurance and reinsurance capacity, and long-term investors. Yet, it’s their advisory role—helping structure deals to be bankable and resilient—that has the greatest impact, and it’s precisely where their input tends to arrive too late.
Take the Upper Trishuli-1 hydropower project in Nepal as a cautionary tale. After the devastating 2015 earthquake, the project’s future hung in the balance, not just because of physical damage, but due to the inability to secure adequate insurance for earthquake risks. Only after the fact were risk advisors from Aon and insurers from Swiss Re Corporate Solutions brought in to design a parametric earthquake insurance solution. This innovation, which linked payouts to a seismic index, ultimately enabled the project to move forward—but the process was far bumpier and more expensive than it needed to be. Had insurance expertise been involved from the outset, the project’s risk architecture could have been stronger, less costly, and more attractive to private investors.
This pattern is all too common. The insurance sector is often called in only after financial terms are largely set and the risk framework is, as Apampa and Cheng put it, “hardened.” At that stage, insurers’ ability to shape feasibility assessments, improve risk allocation, and ensure insurability is sharply reduced. The result? Higher insurance pricing, narrower coverage options, greater uncertainty for commercial participants, and sometimes, donors being forced to shoulder risks that the insurance market could have managed more efficiently. In the end, everyone pays more, and fewer private dollars flow into critical projects.
Why does this matter now? Climate-related hazards are on the rise, and gaps in hazard data and modeling continue to pose significant barriers to insurability in many emerging markets. Early engagement from insurance experts is essential—not just to plug data gaps and support hazard mapping, but to clarify what kinds of risk-transfer are feasible before deals become set in stone. When this work is left too late, insurability becomes an afterthought, rather than a foundational design principle.
So what’s the fix? Apampa and Cheng urge donors, governments, development finance institutions (DFIs), and multilateral development banks (MDBs) to integrate insurance expertise at the very earliest phases of transaction development—during ideation, feasibility assessments, and early modeling. Stronger coordination between ministries, supervisors, DFIs, MDBs, and insurance partners is needed to ensure that insurability constraints are flagged and addressed before deals move toward financial close.
Catalytic capital providers can play a role, too, by allocating design-stage grants and technical assistance funds specifically for early risk assessments, climate modeling, and data development. These investments are small compared to the cost of redesigns or the need for more concessional capital when insurance issues surface later. The insurance industry itself can also help by establishing clearer entry points into transaction development, such as predefined triggers and dedicated advisory capacity that can be mobilized as projects take shape.
Meanwhile, in the heart of the global insurance industry, Berkshire Hathaway’s latest annual report, released on the same day, offered a sobering snapshot of the sector’s financial pulse. CEO Greg Abel, in his first letter to shareholders since taking over from Warren Buffett, reported a decline in both underwriting and investment income for GEICO and other insurance and reinsurance operations in 2025. After two years of rising profits, pretax underwriting profits for Berkshire’s property/casualty units fell 16.5% to just over $9.7 billion, with GEICO accounting for more than half of the $1.9 billion drop.
"GEICO’s broad rate increases in recent years have restored margins but come at the cost of lower retention," Abel wrote. "Competitors’ rate reductions may extend that pressure into 2026." He explained that while GEICO’s written and earned premiums increased by 5.3%—thanks to more policies in force—retention rates declined as customers balked at higher prices and switched to rivals offering better deals. The company’s loss and loss adjustment expense ratio worsened slightly, with bodily injury claims severity up 12-14%, property damage and collision severity rising 2-4%, and bodily injury frequency increasing 4-6%.
Higher advertising and policy acquisition expenses pushed GEICO’s expense ratio up by 2.7 points to 12.4 in 2025, even as the company maintained a 7-9 point expense ratio advantage over competitors. Interestingly, after years of staff cuts that had driven its workforce down by 30% over five years, GEICO’s employee count grew by nearly 5% in 2025 to 29,541. Still, that’s a far cry from the 42,000-plus employees the company had just five years ago.
Abel emphasized that insurance remains core to Berkshire Hathaway, despite the cyclical nature of the business and the headwinds facing both the property/casualty and reinsurance sectors. "Insurance will continue to be our core. While its performance will ebb and flow with capital conditions in the industry—perhaps dramatically—that heart of Berkshire will only grow stronger over time, reflecting the structural advantages that define it," he assured shareholders. Abel also highlighted the importance of underwriting discipline, patient capital, and long-term thinking as the keys to sustainable success in insurance.
Across Berkshire’s commercial insurance operations, premiums declined less than 1% to $18.7 billion, with the combined ratio ticking up slightly to 95.8 in 2025. Reinsurance premiums written dropped 8% to $20.2 billion, reflecting increased competition, lower rates, and a more benign catastrophe loss environment. Underwriting profits declined across all segments, with reinsurance operations seeing the largest percentage drop of 32%. Investment income fell nearly 9% before taxes, and combined underwriting and investment income dropped 12.9% to $19.8 billion in 2025. Overall operating income fell 6% to $44.5 billion, and net income dropped 24% to $67 billion.
What does all this mean for the future? Both reports point to a sector at an inflection point. For blended finance to achieve its potential in addressing climate and development challenges, the insurance sector’s expertise must be brought in early and often. And for giants like Berkshire Hathaway, the path forward lies in doubling down on underwriting discipline, technological investment, and a long-term perspective—resisting the temptations of short-term market share grabs or fleeting industry enthusiasms.
In a world of growing risks and shrinking margins, the insurance sector’s ability to adapt, innovate, and lead will be critical—not just for its own bottom line, but for the resilience and sustainability of the global economy itself.