Global: Climate change commands over a third of insured weather-losses this century and rising
Source: Middle East Insurance Review | Jan 2025
Insure Our Future’s eighth annual scorecard report Within Our Power said that climate change accounted for an estimated $600bn, or over a third, of global insured weather losses over the last two decades — an immense climate price tag that insurers have long been passing on to policyholders. Climate-attributed losses rose from 31% to 38% of total insured weather losses over the last decade on average, outpacing them 6.5% to 4.9% in terms of annual growth.
Te Herenga Waka — Victoria University climate attribution economist Prof Ilan Noy said, “Insurers are fundamentally misunderstanding climate risk by failing to recognise how greenhouse gas emissions have driven up losses throughout this century. Unless we cut emissions sharply this decade, climate damages will grow exponentially and could overwhelm both insurers and economies.”
The continued fossil fuel expansion pushing emissions reductions out of reach relies on essential insurance coverage, which is not guaranteed as insurers’ rapid withdrawals from communities show. Moreover, fossil fuel underwriting is economically dubious. The report’s analysis of 28 top global property and casualty insurers found that their estimated share of climate-attributed losses ($10.6bn) rivalled the $11.3bn in direct premiums they underwrote for commercial fossil fuel clients in 2023.
For more than half the companies, including Allianz, AXA and Zurich, these losses exceeded coal, oil and gas premiums. On average, fossil fuel premiums make up under 2% of total premiums, raising serious questions about why insurers are not using their outsized influence on the fossil fuel sector to protect the other 98% of their business against spiralling climate risks.
The industry’s current approach of underwriting fossil fuel expansion that exacerbates climate risks and withdrawing coverage and/or charging more for these risks is both economically irresponsible and unjust. With 2024 the first calendar year to breach the danger threshold of 1.5°C temperature rise, rapid cuts in greenhouse gas emissions are essential to increase affordable coverage and keep premiums manageable — especially for historically disadvantaged communities. M