A Multi-Layer Network Model of Climate Reinsurance: Company Benefits vs. Climate Resilience?

The global (re)insurance market faces a limited capacity to absorb risk, particularly in areas with increasing climate risks. Only four companies dominate the market. It indicates the possibility of oligopoly limiting the market's capacity to absorb climate risks. Traditional economic models fail to consider the influence of market structures, which we capture in a multilayer network model. The model reflects the activities of public and private entities with insurance cover, primary insurers, and re-insurers, represented as nodes forming multiple layers. To understand the impact of higher levels of risk related to a changing climate, we investigate the risk transfer and claim activation co…