The average market risk premium in the United States decreased slightly to 5.5 percent in 2023. This suggests that investors demand a slightly lower return for investments in that country, in exchange for the risk they are exposed to. This premium has hovered between 5.3 and 5.7 percent since 2011. What causes country-specific risk? Risk to investments come from two main sources. First, inflation causes an asset’s price to decrease in real terms. A 100 U.S. dollar investment with three percent inflation is only worth 97 U.S. dollars after one year. Investors are also interested in risks of project failure or non-performing loans. The unique U.S. context Analysts have historically considered the United States Treasury to be risk-free. This view has been shifting, but many advisors continue to use treasury yield rates as a risk-free rate. Given the fact that U.S. government securities are available at a variety of terms, this gives investment managers a range of tools for predicting future market developments.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2023, average market risk premiums in Germany stood at 5.7 percent.

MRP in Europe

As of 2023, Germany had one of the lowest average market risk premium in Europe. At the same time, market risk premiums in Ukraine were almost twice as high due to the risk of investment involved.

Risk free rates

Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe were relatively low in 2022. The risk free rate of investment in Germany was less than one percent as of 2022.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2023, average market risk premiums in Turkey increased from the previous year. Turkey has second-highest MRP in Europe In 2023, Turkey had the third-highest average market risk premium rates in Europe. That year, right above Turkey, Russia and Ukraine recorded the highest MRP rates in Europe. At the other end of the scale was Netherlands and Switzerland, whose market risk premiums averaged almost quarter of those seen in Ukraine. Risk-free rates Risk-free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk-free rates across Europe were relatively low in 2023, with exceptions. The risk-free rate of investment in Turkey in 2023 was 14.4 percent.

Split into three categories (required, historical, expected), market risk premiums measure the rate of return investors expect on an investment over the risk that investment holds. In Europe, average market risk premiums (MRP) sit between five and ten percent.

Greece sees hike in MRP

Although it has a relatively high market risk premium, Greece has seen its rates significantly decrease since 2020. Greece also saw a higher than average return rate on risk free investments. The same correlation can be seen with Europe’s less risky countries for investment. With Germany seeing some of the lowest market risk premiums and risk free returns in Europe.

Required, historical and expected

Separating the three types of market risk premiums is straightforward. Required MRP’s differ between investors, as approaches to investment change and measure the rate of return needed for an investment to be made. Expected premiums look at the rate of return, and what they are calculated to come out as, while historical MRP’s look back over a period at the average rate of return that investors previously got in the past.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums.

United Kingdom shows little return for risk

Europe wide, Finland had one of the lowest MRP alongside Poland and Germany. Ukraine had average risk premiums of 22.7 percent in 2023. Having a lower market risk premium may seem bad, but for countries such as the UK and Germany where rates have been consistent for several years, it is because the market is stable as an environment for investment.

Risk free rates

Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe are relatively low.

With LSEG's StarMine Equity Risk Premium (ERP) model, gain transparent, high-quality ERP estimates for all major equity markets around the globe.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2024, average market risk premiums in Poland decreased from the previous year to reach 5.8 percent.

Greece and Ukraine with highest MRP in Europe  

In 2023, Poland was relatively well placed for average market risk premiums in Europe, compared to other countries. Countries with the highest MRP, and therefore of the highest investment risk included Ukraine and Russia. Poland's risk premiums reached 7.2 percent. Ukraine risk premiums averaged at 23 percent in 2023.

Risk free rates  

Risk-free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk-free rates across Europe (except for Turkey and Ukraine) were relatively low in 2023. The risk-free rate of investment in Poland was 6.1 percent as of 2023.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. Unfortunately for investors, this is unlikely to happen as average market risks increase due to the added risk of investment. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2024, average market risk premiums in Portugal decreased from the previous year to reach six percent. Greece and Turkey highest MRP in Europe In 2023, Portugal, compared to other European countries had a relatively higher market risk premium. Countries with the highest MRP and therefore of the highest investment risk included Turkey and Ukraine. At the other end of the scale was Switzerland, whose market risk premiums averaged half of those seen in Ukraine. Risk free rates Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average market risk free rates in Europe (with some exceptions) were relatively low in 2023. The risk-free rate of investment in Portugal as of 2024 was 3.1 percent.

Average market risk premiums (MRP’s) in Sweden have fluctuated between 2011 and 2023. As of 2023, the average market risk premium in Sweden amounted to 5.7 percent. Compared to other countries in Europe, Sweden’s average MRP were relatively high. Similar countries included Hungary and Greece amongst others.

Required, historical and expected

Separating the three types of market risk premiums is straightforward. Required MRP’s differ between investors, as approaches to investment change and measure the rate of return needed for an investment to be made. Expected premiums look at the rate of return, and what they are calculated to come out as, while historical MRP’s look back over a period at the average rate of return that investors previously got in the past.

Risk free rates

Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe (with some exceptions) were relatively low in 2022. As of 2022, The average risk-free rate of investment in Sweden was roughly 1.4 percent.

United States US: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at 3.186 % pa in 2016. This records a decrease from the previous number of 3.201 % pa for 2015. United States US: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 2.868 % pa from Dec 1960 (Median) to 2016, with 57 observations. The data reached an all-time high of 4.793 % pa in 1981 and a record low of 0.587 % pa in 1965. United States US: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s United States – Table US.World Bank.WDI: Interest Rates. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics database.; ;

Until the 90s information on risk premiums based on empirical studies for the German capital market was only available sporadically and for short time horizons. Therefore a long term comparison of risk and return was not possible. Markus Morawietz investigates profitability and risk of German stock and bond investments since 1870. He takes inflation and tax issues into account. His work contains a comprehensive collection of primary data since 1870 on key figures on a monthly basis which describe the German capital market. The goal of the study is to identify empirical statements on parameters of the German capital market. Therefore the exposition of theoretical economic models is not of primary importance in this study. A special focus is on the potential applicability of existing Germen index numbers as base data on the empirical investigation. The first chapter “methodological bases of performance measurement” concludes with the definition of the term “performance”. The following hypothesis is tested within this study: “There is a risk premium on securities taking inflation and influences of taxes into account.” The test of this hypothesis is run over the longest time period possible. Therefore monthly data on stock and bond investment are subject of the investigation because they are the most actively traded assets. Furthermore a substitute for the risk-free investment was developed in order to determine the risk premium. Before the explicit performance measurement of the different assets takes place, empirical starting points for performance measurement will be defined. These starting points contain a relevant demarcation of the investigation period and a description of the historical events during the investigation periods for all periods. Hereby special consideration is given to the specific problems of long term German value series (interruption trough the First World War with the following Hyperinflation and the Second World War). The analysis of the basics of performance measurement concludes the empirical starting points for performance measurement. The starting points contain the definition of a substitute for the certain segment, the description and preparation of the underlying data material and the calculation method used to determine performance. The third chapter contains a concrete empirical evaluation of the available data. This evaluation is subdivided into two parts: (a) performance measurement with unadjusted original data and (b) performance measurement with adjusted primary data (adjusted for inflation and tax influences). Both parts are structured in the same way. First the performance measurement of the specific asset (stocks, bonds and risk-free instruments) will be undertaken each by itself subdivided by partial periods. Afterwards the results of the performance measurement over the entire investigation period will be analyzed. The collection of derived partial results in the then following chapter shows return risk differences between the different assets. To calculate the net performance the nominal primary data is adjusted by inflation and tax influences. Therefore measured values for the changes in price level and for tax influences will be determined in the beginning of the third chapter. Following the performance measurement will be undertaken with the adjusted primary data. A comparison of the most important results of the different analysis in the last chapter concludes.

Data tables in histat (topic: money and currencies):

A. Discount and Lombard rate A.1 Discount rate: monthly average values, yearly average values (1870-1992) A.2 Lombard rate: monthly average values, yearly average values (1870-1992)

B. Stock price index, dividends and bond market und B.1a Stock price index: monthly average values, yearly average values (1870-1992) B.2 Dividends: monthly average values (1870-1992) B.3 Bond market: monthly average values, yearly average values (1870-1992)

C. Risk free instrument C.1 Private discount rate: monthly average values, yearly average values (1870-1991) C.2 Overnight rate: monthly average values, yearly average values (1924-1992)

D. Inflation rate D.1 Price index for costs of living (base1913/14 = 100), monthly average values, yearly average values (1870-1992) D.2 Inflation rate (base 1913 = 100), M monthly average values, yearly average values (1870-1992)

Mongolia MN: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at 5.047 % pa in 2015. This records a decrease from the previous number of 6.822 % pa for 2014. Mongolia MN: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 6.822 % pa from Dec 2013 (Median) to 2015, with 3 observations. The data reached an all-time high of 8.922 % pa in 2013 and a record low of 5.047 % pa in 2015. Mongolia MN: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s Mongolia – Table MN.World Bank.WDI: Interest Rates. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics database.; ;

Armenia AM: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at 1.253 % pa in 2023. This records an increase from the previous number of 1.131 % pa for 2022. Armenia AM: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 7.526 % pa from Dec 2001 (Median) to 2023, with 23 observations. The data reached an all-time high of 13.934 % pa in 2005 and a record low of 1.131 % pa in 2022. Armenia AM: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s Armenia – Table AM.World Bank.WDI: Interest Rates. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.;International Monetary Fund, International Financial Statistics database.;;

The average market risk premium used in Norway fluctuated between 2011 and 2023. As of 2023, the average market risk premium (MRP) in the country reached a value of 5.8 percent. In 2023, Norway had one of the lowest MRP rates in Europe.

Tanzania TZ: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at -0.215 % pa in 2016. This records a decrease from the previous number of 3.234 % pa for 2015. Tanzania TZ: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 7.378 % pa from Dec 1995 (Median) to 2016, with 22 observations. The data reached an all-time high of 18.668 % pa in 1996 and a record low of -0.215 % pa in 2016. Tanzania TZ: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s Tanzania – Table TZ.World Bank.WDI: Interest Rates. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics database.; ;

The average market risk premium in Canada was 5.2 percent in 2024. This means investors demanded an extra 5.2 Canadian dollars on a 100 Canadian dollar investment. This extra cost should compensate for the risk of an investment based in Canada. What causes risk? As far as country-specific factors are concerned, macroeconomic trends can cause risk. For example, the inflation rate in relation to other countries can change the relative value of an investment. Lower inflation in Canada could weaken the Canadian dollar, reducing the value of Canadian assets in terms of another currency, such as the euro or U.S. dollar. The Canadian context As a country, Canada has a fairly high national debt. Some economists point to this as an increased default risk, since debt servicing can become costly. However, most investors agree that Canada, as an advanced economy, is creditworthy and not at risk of defaulting. A better measure is to look at Canada’s risk premium in the context of interest rates from other countries. These deposit rates can be used as a baseline for the market risk premium of other countries, though they do not include all the factors that have been used to calculate this statistic.

This repository stores replication files for "Measuring the Time-Varying Market Efficiency in the Prewar and Wartime Japanese Stock Market, 1924–1943," recently accepted by the Asia-Pacific Economic History Review.

Philippines PH: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data was reported at 4.138 % pa in 2016. This records a decrease from the previous number of 4.309 % pa for 2014. Philippines PH: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data is updated yearly, averaging 1.887 % pa from Dec 1976 (Median) to 2016, with 31 observations. The data reached an all-time high of 5.006 % pa in 1983 and a record low of -0.334 % pa in 1984. Philippines PH: Risk Premium on Lending: Lending Rate Minus Treasury Bill Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s Philippines – Table PH.World Bank.WDI: Interest Rates. Risk premium on lending is the interest rate charged by banks on loans to private sector customers minus the 'risk free' treasury bill interest rate at which short-term government securities are issued or traded in the market. In some countries this spread may be negative, indicating that the market considers its best corporate clients to be lower risk than the government. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics database.; ;

The average market risk premium used in Switzerland fluctuated between 2011 and 2023. As of 2023, the average market risk premium in Switzerland stood at 5.6 percent.

According to Cognitive Market Research, the global natural catastrophes insurance market size will be USD XX million in 2024. It will expand at a compound annual growth rate (CAGR) of 21.20% from 2024 to 2031.

North America held the major market of more than 40% of the global revenue with a market size of USD XX million in 2024 and will grow at a compound annual growth rate (CAGR) of 19.4% from 2024 to 2031.
Europe accounted for over 30% of the global USD XX million market size.
Asia Pacific held a market of around 23% of the global revenue with a market size of USD XX million in 2024 and will grow at a compound annual growth rate (CAGR) of 23.2% from 2024 to 2031.
The Latin America market will account for more than 5% of global revenue and will be USD XX million in 2024, growing at a compound annual growth rate (CAGR) of 20.6% from 2024 to 2031.
The Middle East and Africa held the major markets, accounting for around 2% of the global revenue. The market was USD XX million in 2024 and will grow at a compound annual growth rate (CAGR) of 20.9% from 2024 to 2031.
The brokers held the highest natural catastrophe insurance market revenue share in 2024.

Market Dynamics of Natural Catastrophes Insurance Market

Key Drivers of Natural Catastrophes Insurance Market

Technological Advancements in Risk Modeling and Assessment Drives Market Growth

Technological advancements are pivotal in driving growth within the natural catastrophes insurance market. With the advent of sophisticated risk modeling and assessment tools, insurers can better understand and quantify the potential impacts of natural disasters. These advancements enable insurers to assess risk levels more accurately, set appropriate premiums, and develop tailored insurance products to meet clients' evolving needs. Moreover, technology facilitates the integration of vast datasets, including historical weather patterns, geological data, and socio-economic factors, into risk models. This enhanced data analytics capability enables insurers to identify emerging trends and anticipate potential catastrophes more effectively. By leveraging advanced predictive analytics and machine learning algorithms, insurers can improve underwriting processes, streamline claims management, and enhance operational efficiency. As a result, technological innovation drives market growth and contributes to the resilience of communities and businesses in the face of natural disasters.

Regulatory Changes Affecting Insurance Requirements Propel Market Growth

Regulatory changes are pivotal in driving growth within the natural catastrophes insurance market. As governments worldwide implement stricter regulations regarding insurance coverage for natural disasters, insurers must adapt their offerings to meet these new requirements. These changes often involve mandates for increased coverage limits, expanded geographic coverage areas, or enhanced resilience measures, all contributing to a higher demand for insurance products. Moreover, regulatory frameworks frequently incentivize insurers to develop innovative solutions to mitigate the financial impact of natural catastrophes. This drive for innovation fosters the development of new risk assessment models, sophisticated underwriting techniques, and the creation of specialized insurance products tailored to address specific types of natural disasters. As a result, the natural catastrophe insurance market continues to evolve in response to regulatory pressures, ultimately driving growth and ensuring greater financial protection for individuals, businesses, and communities vulnerable to the impacts of such events.

Restraint Factors Of Natural Catastrophes Insurance Market

Limited Historical Data for Emerging Risks Hampers Market Growth

The natural catastrophes insurance market faces significant challenges due to limited historical data for emerging risks. As climate change introduces new and evolving hazards, insurers need robust historical data to accurately inform their model to assess and price these risks. This limitation inhibits the development of comprehensive risk management strategies and may lead to underestimation of potential losses, exposing insurers to greater financial volatility. Furthermore, the absence of historical data for emerging risks complicates insurers' ability to communicate risk to policyholders and regulators effectively. With a clea...