Climate-related disruptions of international supply chains pose a major systemic risk. In Europe, for example, the 2021 floods in Germany and Belgium paralysed logistics and manufacturing, while droughts in southern Europe in 2022 reduced harvests and strained water supplies.

Dr. Mikael A. Mikaelson, Policy Fellow at SEI, said, “Climate shocks are now driving supply-chain shocks, cascading through interconnected networks rather than remaining isolated disasters. As local weather extremes ripple through interdependent systems, they can quickly become global shortages and delays that threaten economic security.”

Insurance and reinsurance, the financial mechanisms that typically absorb these shocks, are being tested by the increasing complexity, frequency, and severity of climate hazards. As insurers retreat from high-risk geographies and sectors, the burden of loss increasingly shifts to public budgets, enterprises, and households.

“Climate risk is becoming systemic faster than insurance systems can adapt – and when losses can no longer be diversified, insurance stops working as designed,” added Mikaelsson.

While innovative solutions, such as parametric products, Contingent Business Interruption (CBI) cover, and resilience-linked assessments, provide useful tools, they remain limited in scope and reliability, the report said.

Insurance coverage also remains narrowly focused on assets and direct damages, excluding slow-onset, indirect, and social dimensions of climate risk. Climate-related impacts on human health and productivity among supply-chain workers are particularly under-recognised.

The report found that structural and technical limitations – including reliance on historical data, incomplete climate-adjusted modelling, and fragmented risk metrics – undermine insurers’ ability to anticipate systemic exposure. There is a clear need for harmonised standards and forward-looking, probabilistic models.

Short-term underwriting cycles and annual repricing further constrain insurers’ ability to support long-term adaptation, as the focus on immediate solvency and profitability conflicts with the multi-decadal nature of climate risk.

Additionally, risks to labour in supply chains are largely invisible to current life and health insurance systems, particularly for physically exposed roles in agriculture, construction, and logistics. Workers in such roles often fall outside formal insurance systems, and even when insured, climate-related illness, productivity loss, or mental health impacts are rarely recognised or compensated.

The report emphasised that without substantial changes to business models, regulation, and public–private coordination, the sector risks undermining stability by amplifying systemic climate stress.

“Insurance alone cannot manage systemic climate risk. Without stronger adaptation, better data, and coordinated public–private governance, risk transfer will increasingly fail where resilience is needed most,” Mikaelson concluded.

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InnSure explained that Creation Labs is a launch and growth platform that will foster the development of new climate risk management products and accelerate their go-to-market time.

“By matching insurance innovators with communities, Creation Labs aims to close climate-driven insurance protection gaps and facilitate the launch of new, scalable climate risk management projects and services that address communities’ greatest climate challenges,” the company added.

The platform is supported by the New York State Research and Development Authority (NYSERDA), which previously awarded InnSure a $5 million grant to develop a program which served as the precursor and pipeline to Creation Labs.

InnSure noted that its targeted Creation Labs programs will connect entrepreneurs, innovation partners, and communities with differentiated support, giving entrepreneurs access to capital and expertise, partners climate-risk solutions and infrastructure, and communities hands-on accelerator services and mentorship.

With this in mind, the company is currently seeking early-to mid-stage growth companies with climate impact-focused innovative risk transfer, technology, and/or data solutions in risk management to join the second cohort of Creation Labs for Q1 2026.

InnSure’s Managing Director, Christopher Lowell, commented, “With Creation Labs, we’re equipping bold, forward-thinking companies with the resources and network necessary to accelerate the deployment of affordable, scalable insurance solutions that meet critical climate-related market gaps in communities that need them the most.

“Communities nationwide need solutions that not only address the growing impacts of extreme weather but also strengthen their long-term economic resilience and support their transition to green energy.”

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Commenting on the official end of this year’s season, Sam Phibbs, MS Amlin’s Head of Catastrophe Research, noted that the total number of named storms and hurricanes fell below both forecasts and the long-term average. However, he said 2025 will be remembered for the unprecedented share of storms reaching high intensities.

Phibbs said, “This season also saw an extraordinary proportion of storms reach Category 5 status, defined by winds above 157mph. A staggering 60% of hurricanes hit the top of the scale – the highest share on record. This aligns with projections that climate change is pushing more storms towards extreme intensity, and potentially devastating consequences if they make landfall.”

He commented on Hurricane Melissa, which struck Jamaica with devastating force: “Sustained winds reached 185mph, making it the joint second strongest hurricane on record.

“Melissa was not an anomaly but a warning of the supercharged storms we are likely to face more often in a warming world. Its rapid intensification – with winds doubling from 68mph to 139mph in a single day – illustrates how warmer oceans are fuelling hurricane strength in the Atlantic basin. This trend is deeply concerning, particularly as rapid intensification remains difficult to forecast, leaving communities with less time to prepare or evacuate.

Phibbs emphasised, “There is a compelling case for stronger building codes across the Northeast and midAtlantic, bringing standards in line with hurricane-prone states such as Florida and Louisiana. Without such measures, the protection gap will widen, leaving more people vulnerable to the catastrophic impact of these storms. This season stands as one of the starkest reminders of the risks we now face.”

Although no hurricanes made landfall in the U.S. this year, MS Amlin’s research indicates that insured losses from U.S. hurricanes could rise nearly 50% under a 2°C global warming scenario.

Under this scenario, Category 4 and 5 hurricanes with winds exceeding 130mph could become more frequent and maintain their strength further north, threatening cities along the upper East Coast — regions historically less exposed and less prepared — due to warming ocean temperatures.

The findings also showed that Florida is projected to see the largest absolute increase, with insured losses rising by 44%. New York’s insured losses could rise by 64%, while Rhode Island and Massachusetts may see increases of more than 70% in average annual loss. The Carolinas may face a 60% increase in losses during major storm years, three times higher than projected increases in Texas.

In addition, a repeat of the 2022 hurricane season, which cost $62 billion, could exceed $90 billion in insured losses under the warming scenario.

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The company’s analysis shows that eight of the ten largest industrialised nations now face significantly higher losses from weather events as a proportion of gross national income compared with the 1980s.

According to Munich Re, recent years have been especially costly for the United States, Germany and India, where extreme events have steadily weakened economic resilience.

Released ahead of the COP 30 climate summit in Brazil, the Munich Re study illustrates how even the strongest economies are exposed to rising financial pressure from worsening heat, flooding, storms and wildfires. Munich Re finds a marked increase in loss ratios in the United States, Germany, Canada, Italy and France, with India, Japan and Brazil also experiencing upward movement, although to a lesser extent.

Grimm, speaking for Munich Re, underlines the global nature of this challenge. “Rich countries, poor countries – it makes no difference to climate change. Weather disasters destroy lives, livelihoods and economic assets all over the world. It would make more sense to invest much more money in prevention than having to spend billions rebuilding after disasters – in richer and poorer countries alike.”

Munich Re reports that between 2020 and 2025 the US recorded average annual losses equal to 0.54 per cent of GNI, Germany reached 0.29 per cent and India 0.28 per cent. In monetary terms this represents approximately 150 billion US dollars a year in the United States, 14 billion US dollars in Germany and 9 billion US dollars in India, adjusted for inflation. The sharpest long-term escalation is observed in the United States, where losses relative to economic output have increased fivefold since the 1980s. Germany has followed a similar path, influenced heavily by the Ahr Valley floods of 2021.

Although these national loss ratios may appear modest, Munich Re highlights that the strain in affected regions is far greater. Local communities often face a disproportionate share of the financial and social burden, and the pressure on public budgets can intensify sharply. Studies referenced by Munich Re show that money spent on protective measures can avoid far higher costs in the long run.

Grimm notes that recent years have included exceptional individual events such as the 2021 flooding in Germany and severe flooding in Brazil in 2024. He commented: “For some countries, the damage data has been particularly influenced by individual events in recent years, such as the flooding in Germany’s Ahr Valley in 2021 or the worst flooding seen in Brazil in decades, in 2024. What many of these outlier events have in common is that studies have identified a clear influence of climate change: they are becoming more frequent and more intense.”

The study uses Munich Re NatCatSERVICE data going back to 1980, with losses compared against GNI from each corresponding year. Munich Re explains that this approach offers a clearer view of the relative burden faced by each country and helps offset the effects of rising asset values over time.

Munich Re also points to the value of preventative action. China provides a prominent example. Despite continued billion-dollar flood losses, long-term losses relative to GDP have fallen significantly since the 1990s due to substantial investment in flood-management systems. This stabilisation has continued even as exposure has grown alongside rapid economic development.

Country-level patterns add further detail to Munich Re’s findings. In Canada, losses relative to GNI in the past five years were more than four times higher than the 1980s average. Severe thunderstorms have generated the largest share of losses since 1980, followed by floods and wildfires. The insurance gap has narrowed over time, although a notable proportion of losses remains uninsured.

In the US, tropical cyclones remain the dominant source of financial damage, responsible for just over half of total inflation-adjusted losses since 1980. Severe thunderstorms represent the second-largest contributor and have become increasingly significant, accounting for around one third of losses in the most recent five-year period.

Munich Re highlights that while major hazards such as tropical cyclones or earthquakes can cause extremely high losses, the overall trend is shaped increasingly by less dramatic but more frequent events such as floods, storms involving hail and wildfires. Less than half of total losses remain uninsured in the United States, with high insurance penetration for thunderstorm and wildfire losses.

Munich Re’s specialists conclude that the rising financial toll on some of the world’s most advanced economies reinforces the importance of strengthening resilience and investing in preventative strategies. As losses continue to grow, preventative investment remains one of the most effective means of protecting future economic stability.

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Ping An’s programne integrates insurance solutions, advanced technology, and community engagement to create a long-term system for preserving ancient and notable trees across China, showcasing the company’s leadership in climate action and biodiversity conservation.

China is home to approximately 5.08 million ancient trees, valued for their ecological, historical, and scientific importance.

Ping An recognises that these trees face growing risks from climate change, pest infestations, and limited maintenance resources. Their dispersed locations and the difficulty of quantifying their ecological and cultural value present challenges for traditional insurance providers, making comprehensive protection difficult.

To address these challenges, Ping An developed an innovative “Insurance + Technology” model, leveraging big data, artificial intelligence, and IoT to analyse tree growth, location, and historical risk patterns.

In 2023, Ping An launched Guangdong’s first ancient-tree insurance programme, establishing a comprehensive mechanism covering pre-disaster prevention, emergency response, and post-disaster compensation. By October 2025, Ping An had extended over RMB 700 million (approximately USD 98 million) in coverage for more than 55,000 ancient and notable trees nationwide.

Technology is central to Ping An’s conservation efforts. The company uses IoT devices and environmental sensors to monitor soil moisture, air quality, and tree health around the clock, sending real-time data to a cloud-based management system that provides visualisations and alerts for caretakers.

Ping An also developed the proprietary “EagleX” system, combining remote sensing, meteorology, big data, and AI to monitor extreme weather, floods, typhoons, and other risks. By delivering timely warnings, Ping An moves beyond post-disaster compensation, allowing proactive measures that significantly reduce potential damage.

Ping An also engages communities through educational programs, photography exhibitions, and public awareness campaigns on biodiversity. In 2025, Ping An launched the “Travel with Ancient Trees” eco-tourism initiative, creating routes highlighting ancient trees and reaching 250 million users via the “Auto Owner” app. This campaign simultaneously raises environmental awareness and stimulates local green economies, reinforcing Ping An’s commitment to combining conservation with social impact.

Ping An positions the “Ancient Tree Guardian Action” as a key component of its green finance strategy. The company provides insurance coverage for carbon-storing ecosystems, including forests, grasslands, wetlands, and marine environments. By the end of 2024, Ping An’s Carbon Sink Insurance programme had expanded to 18 provinces and municipalities, offering robust financial support for ecological protection.

Ping An has further strengthened its green finance initiatives across insurance, banking, and investment. From June 30, 2025, Ping An’s green investments totalled RMB 144.482 billion (around USD 20 billion), green loan balances reached RMB 251.746 billion (approximately USD 35.3 billion), and green insurance premiums for the first three quarters amounted to RMB 55.279 billion (about USD 7.7 billion).

Chen Yao, General Manager of Ping An Group’s Brand Department, emphasised: “Ping An will persist in promoting innovation within green finance. The Group aims to create a wider range of green insurance and investment products, collaborating with international partners to support sustainable development and the preservation of our environment.”

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“The Framework, which focuses on strategy, evaluation, innovation and talent, provides an actionable pathway to profitable growth by helping re/insurers capture surging premiums from rapid innovation and rising investments in sustainable energy solutions – such as hydrogen, battery storage and renewables,” Aon explained.

According to the firm, the framework will help re/insurers align their underwriting appetite with emerging technologies, integrate transition risk management into enterprise strategies, and leverage performance analytics to benchmark their portfolios.

Wouter Bosschaart, global climate and net-zero transition leader for re/insurers at Aon, commented, “With energy transition premiums set to surge, Aon’s Low-Carbon Transition Framework empowers re/insurers to make better business decisions and seize opportunities around this growth.

“As the industry develops new products and services that align with this rapidly evolving sector, it will help to drive climate resilience for governments, businesses and communities, while delivering enduring value for stakeholders.

“Re/insurers that adopt data-driven insights will be best-positioned to capture market share and deliver sustainable, profitable growth through the energy transition.”

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Extreme weather events and natural catastrophes have become some of the most significant economic risks worldwide. Losses are continuously increasing, while insurance penetration remains limited in many vulnerable regions.

Fischer noted that to effectively address these risks, insurers must be proactive and strategically realign their approach.

She explained that socio-economic processes are the primary driver behind the increase in insured nat cat losses. Population growth, rising prosperity, and rapid urbanisation are concentrating valuable assets in high-risk areas, amplifying exposure to natural hazards. Additionally, rising construction costs, labour shortages, and supply chain disruptions are pushing up rebuilding costs following natural disasters.

The consequences extend beyond individual businesses or households. Natural catastrophes can significantly impede the economic development of entire regions, threaten jobs, and weaken local infrastructure over the long term. In countries with low insurance penetration, such events further exacerbate social disparities.

Historically, the largest nat cat losses have been caused by “primary perils”, which are infrequent but result in severe damage. However, in 2024, “secondary perils” accounted for more than half of all insured nat cat losses worldwide, underscoring their growing relevance.

Secondary perils, such as floods, wildfires, and severe convective storms, occur more frequently and typically result in smaller individual claims, but their cumulative impact is substantial.

Fischer explained that rising global temperatures are increasing the risk and magnitude of natural hazards, resulting in greater loss potential. Although climate-change-related losses are still modest, some studies project that by the middle of this century, they could account for a double-digit percentage of global GDP.

Despite rising losses, insurance penetration remains low in many regions. In 2024, losses from natural catastrophes exceeded $300 billion, of which only 40% were insured. On a positive note, the proportion of insured nat cat losses is gradually increasing, and the protection gap is narrowing.

However, there are significant regional disparities: the largest coverage gaps and financial risks are found in countries of the Global South.

Fischer emphasised that insurers can act as enablers of climate resilience. She stated, “The location and construction of valuable assets are critical determinants of loss potential, especially as the likelihood of natural catastrophes increases. Adaptation through stricter building codes or smart urban planning is crucial. Insurers can strengthen their clients’ resilience through long-term investments and tailored solutions, such as captives and ESG liability products.

“Highly specialised NatCat assessment tools and bespoke climate risk consulting enable comprehensive risk evaluation and enhance clients’ resilience to future challenges. Long-term partnerships are key to achieving this,” Fischer concluded.

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This taskforce would unite insurers, the broader financial sector, regulators, governments, businesses, civil society, and international organisations.

The COP30 Insurance Communiqué, titled “Insuring the Transition,” urges a coordinated approach to lowering climate risks, enhancing insurability, and fostering inclusive, resilient, and sustainable communities and economies. This announcement precedes the 2025 UN Climate Change Conference (COP30) in Belém, Brazil.

The statement emphasises the insurance sector’s threefold function as risk managers, risk bearers, and institutional investors. It also emphasises that these functions and expertise be acknowledged in international policy frameworks and integrated into national strategies and action plans for climate and biodiversity.

The taskforce will evaluate and map climate-related risks, losses, and gaps in insurance coverage across regions, sectors, and income levels under various climate and environmental scenarios, providing a foundation for equitable and effective risk-sharing strategies.

It will also offer actionable guidance to finance ministries and regulators on promoting loss prevention, enhancing insurance markets, and developing more equitable and sustainable methods for sharing risk.

The communiqué notes that the taskforce can bolster the ability of governments, finance ministries, and supervisory authorities to manage climate and environmental risks in a structured way, including establishing the position of a country risk officer to spearhead climate and disaster risk reduction initiatives.

The forum seeks to drive insurance and finance toward supporting the transition to clean energy, nature-positive initiatives, and resilient infrastructure by identifying policies that encourage insurers to take a more direct role.

It will foster the conditions necessary to advance catastrophe risk modeling and develop risk transfer solutions that broaden access to affordable and sustainable coverage.

The taskforce will examine policy options to make insurance more accessible and reasonably priced for vulnerable households, marginalised communities, MSMEs, and critical sectors like agriculture, while avoiding measures that could deepen inequality or undermine incentives for risk reduction.

The communiqué also highlights the threat of a global insurability crisis, which could limit access to other financial services and disrupt economic activity across multiple sectors.

Laurence Tubiana, a key architect of the Paris Agreement and the COP30 Presidency’s Special Envoy to Europe, commented: “As society’s risk manager, the insurance industry’s message is loud and clear: economic losses and the protection gap will increase further if the emissions and adaptation gaps persist, and if we continue to destroy life-supporting natural ecosystems that build our resilience to extreme weather events.

“A global insurability crisis will exacerbate the cost-of-living crisis and present a systemic risk to financial stability. This communiqué sends a powerful signal that reducing climate risk and improving insurability require a systematic response – one that bridges insurance, finance, policy, the real economy and society. I fully support the creation of a multistakeholder international taskforce to address this challenge.”

Butch Bacani, Head of Insurance, UNEP, added: “This communiqué is a clarion call for a whole-of-society approach to reduce climate risk, protect nature, and close the protection gap. A world that is more inclusive, resilient and sustainable is a world that is more insurable. This is why COP30 is a pivotal moment in time to insure the transition and enable the future we want for present and future generations. Time is non-renewable.”

Global economic losses from natural disasters hit $368 billion in 2024, according to broker Aon’s figures, continuing a nine-year streak of losses above $300 billion, with nearly 60% remaining uninsured.

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ZestyAI recently released its 2025 State of Property Insurance survey, which includes insights from more than 220 property and casualty (P&C) executives.

The report underscored the growing impact of climate volatility, with wildfires increasingly hitting urban areas, hailstorms setting new records with billion-dollar damages year after year, and water damage rising in frequency and severity. Yet much of the industry continues to model risk as if little has changed.

The survey found that 64% of executives believe their company is adapting to climate-driven pressures faster than the broader industry, but far fewer are confident in the sector’s collective progress, with 61% saying the industry overall is not adapting fast enough.

Nonetheless, 68% of executives say advanced AI models help manage climate-related losses more effectively, and nearly three-quarters report that AI creates new revenue opportunities and improves underwriting.

However, only one in four cite AI as a primary method for managing perils, and a notable number of carriers have no model at all—15% for non-weather water, 14% for attritional fire, and 12% for wildfire and severe convective storms.

Despite 83% of leaders feeling equipped to use AI, adoption remains uneven, with just 40% of carriers embedding it into core workflows.

Many insurers still rely heavily on legacy actuarial and stochastic models, which were designed for a more stable risk environment and fail to capture today’s clustered, compound, and property-specific loss patterns.

The survey found that 41% of executives view stochastic models as the most accurate tool for predicting risk, compared to 20% for AI.

The report concluded that to maintain the stability of property insurance, carriers must modernise peril models with property-level precision before the next billion-dollar loss and integrate AI into underwriting, pricing, and claims workflows.

Attila Toth, Founder and CEO of ZestyAI, said, “The industry is still modeling risk as if little has changed, even as climate volatility accelerates. Relying on yesterday’s tools is leaving insurers exposed to today’s billion-dollar events, from urban wildfires to catastrophic hailstorms.

“AI-driven, property-specific models don’t just predict risk more accurately; they also show how mitigation changes outcomes, giving insurers, regulators, and policyholders the transparency they need to build resilience. As we look to 2026, the industry faces a choice: continue relying on models built for yesterday’s risks, or embrace a future where every property can be understood, priced, and protected on its own terms.”

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Ahead of a busy day of discussions and panels dedicated to the Afro-Asian insurance and reinsurance sectors, GIC Re’s Joshi delivered an insightful keynote, which focused on his belief that emerging markets and resilient growth will be the dominate theme for the foreseeable future.

“The story of this century will be written by emerging markets and Africa. Emerging economies will take centre stage due to their key role in driving global growth. And given emerging challenges, growth will have to be resilient. Given the challenges caused by climate change, we need to calibrate growth measures and trajectory through responsive, inclusive and sustainable growth, which will ensure resilience,” he said.

The theme of 29th edition of the annual conference was resilience and sustainability, which Joshi explained has been emerging as a theme since 1970, but really only got formal recognition in 2015 by the way of the sustainable development goals promoted by the United Nations.

“If you look at the timeline of sustainable development goals, SDG, which runs from 2015 to 2030, we have achieved about 35-40% of the targets set for 2030. However, it is noteworthy that targets were not recast following the pandemic, so we need to adjust this 35-40% achievement in the context of the pandemic,” he explained.

“SDGs are intertwined with insurance in a major way, directly as well as indirectly. Insurance is at the heart of SDGs. Resilience challenges encompass macroeconomic uncertainty, currency and interest rate volatility, capital flight, protectionism, sanctions, regional conflicts, supply chain disruptions, digital and cyber risks, regulatory changes, pandemic, and climate change. However, the most daunting is climate change,” continued Joshi.

He explained that, over the last decade, the climate change scenario has undergone a massive transformation, noting that 2015 was the warmest year with the global average temperature approximately 1.1°C above pre-industrial levels. Then, 2016 saw 1.3°C above the baseline, and 2023 saw 1.45°C above the base line, and 2024 saw 1.6°C above the baseline. 1850 to 1900 is considered the baseline for comparisons.

According to a meteorological organisations, and as highlighted by Joshi, there is an 86% chance that at least one year between 2025 and 2029 will exceed 1.5°C above this base level, and there is a 70% chance that the final average warming for 2025-29 will be more than 1.5°C.

“Of course, risk markets can help capital markets with the right risk written equation. Global capital markets, valued over $400 trillion, dwarf the insurance sector, which manages about $40 trillion in assets, and generates about $8 trillion in annual premiums,” said Joshi.

He went on to reiterate that insurance and reinsurance are at the heart of financial inclusion, financial convergence, and sustainability and resilience.

“Resilience will depend on the purchase of insurance and reinsurance, which was reflected in the dominant theme, called the protection gap,” said Joshi.

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