From Risk to Resilience: How Insurance is Rewriting the Climate Playbook

The insurance industry stands at a crossroads. As climate-related disasters surge by 57% and weather-related losses dwarf traditional risks, insurers are becoming active architects of resilience rather than passive observers. At the recent De-risking Summit 2025, industry leaders revealed how insurance is evolving from a reactive safety net into a proactive catalyst for climate adaptation.

The Numbers Don't Lie

Weather-related insured losses have exploded from under $20 billion in the 1970s to over $140 billion today, while man-made event losses remain flat. With the top 215 companies facing $1 trillion in climate-related financial risks, business as usual is no longer an option.

Traditional risk modelling relies on 50 years of historical data, but as Cathal Carr (Oak Re) explained, "that's not possible anymore”. Climate change has rendered historical patterns obsolete.

Three Pillars of Climate-Smart Insurance

Sir Danny Alexander (HSBC) outlined a clear strategy the industry should seek to adopt:

1. Rewarding Resilience - Premium structures now incentivise climate adaptation. Properties with flood-resistant design or natural protective barriers qualify for reduced rates.
2. Tailored Climate Underwriting - Specialised teams develop bespoke solutions for climate technologies, making previously "uninsurable" innovations commercially viable.
3. Capital Deployment - With  £1.8 trillion under UK management alone, insurers can reduce future risk exposure while generating returns by investing in climate solutions.

Innovation in Action

Emerging innovations are transforming the sector:

• Parametric Insurance delivers claims payments within 48 hours based on pre-defined triggers such as wind speed
• Climate Analytics enable location-specific risk assessments across multiple scenarios
• Supply Chain Risk Assessment helps businesses understand cascading climate impacts

Beyond Risk Management

Climate-conscious insurance now provides intelligence for strategic planning, operational resilience, regulatory compliance, and investment decisions. With $4.5 trillion needed annually for clean energy alone, insurability serves as a key indicator of investment attractiveness.

From Defensive to Offensive

The most striking transformation is insurance's evolution from defensive to offensive climate strategy. Companies such as Howden are integrating climate risk assessment into every business aspect, from due diligence to product design, demonstrating how comprehensive climate risk management becomes competitive advantage.

The Bottom Line

Climate change isn't just changing the weather - it's changing the entire insurance landscape. The message for businesses is clear: resilience pays. Investments in climate adaptation are increasingly rewarded with better coverage and lower premiums.

The insurance industry, once a conservative follower, is becoming an unlikely leader in climate transformation-proving that sometimes the best defence is indeed a good offense.