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Climate & Environment · Global

Insurance professionals warn climate risks are being obscured

As insurers in some states have pulled back from new home policies or sought higher rates amid growing catastrophe losses, insurance professionals are raising concerns that climate risks may be obscured.

AI-assisted synthesis · Based on 5 outlets' reporting · Article text read from 1 of 5 outletsHow it's made

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5 outlets2 regionsLatest reporting 3 min read
Coverage: Too few ratedL 1 · C 1 · R 0 · 3 unrated

What happened

Key facts

  • In 2024, insurers in several U.S. states pulled back from offering new home policies or sought large rate increases as wildfire and other catastrophe losses grew.
  • California’s insurance department announced a sustainable insurance strategy in September 2023, after major insurers restricted new business in the state.
  • California’s insurance department said its September 2023 strategy was intended to encourage insurers to write more policies.
  • The European Union adopted the Solvency II Directive in 2009; it established capital and risk-management requirements for insurers and took effect in 2016.
  • The Financial Stability Board was established in 2015.

The brief

An anonymous group of senior United Kingdom and European insurance and reinsurance professionals warns that inadequate industry methods for assessing climate risk could leave homeowners, businesses and governments facing growing uninsured losses and threats to financial stability.

The group set out its concerns in a memo titled “Sounding the Alarm,” issued through the confidential UK platform Inside Track on October 14, according to The Energy Mix. The memo focuses on how climate risks are assessed and conveyed.

The group says those risks “aren’t being communicated to or aren’t being properly internalized by government,” raising concerns that public decision-making may not fully account for the exposure. The warning is the group’s assessment; the memo excerpt does not provide a measure of the uninsured losses or specify particular risks, locations or government decisions.

The professionals also point to short-term commercial incentives that, they say, encourage insurers to limit their own financial exposure. Their warning links the industry’s assessment methods and those incentives to a wider protection gap: homeowners, businesses and governments could face growing losses without insurance coverage.

The group does not identify individual insurers or describe specific coverage decisions. The memo warns that widespread restrictions on property insurance or withdrawals of coverage could create systemic financial risks comparable to those associated with the 2008 financial crisis.

That is a conditional warning about a potential consequence, not a claim that such a crisis has occurred. The group also cautions that, without intervention, physical climate risks could become major economic risks. Climate finance writer Kate Mackenzie addressed the memo’s implications in a LinkedIn post.

She argued that the insurance industry is obscuring a substantial amount of climate risk and characterized the issue as one of public policy and public finance. Her comments add a public-finance framing to the memo’s concerns about government awareness, insurance coverage and financial stability.

The memo and Mackenzie’s comments make the communication of climate risk central to the warning: the group says governments may not properly internalize the risks, while Mackenzie describes the issue as a public policy and public finance matter. The account does not set out a particular intervention or assign responsibility for taking it.

Its central warning is that insurance restrictions or withdrawals, if widespread, could connect physical climate exposure to wider economic and financial risks.

Why it matters

  • Homeowners, businesses and governments could bear growing uninsured losses if climate risks are not reflected in decisions about coverage.
  • Widespread restrictions or withdrawals of property insurance could expose financial systems to risks the group compares with those associated with the 2008 financial crisis.
  • The group says short-term commercial incentives encourage insurers to limit their own financial exposure, while it warns that this may leave broader climate risks insufficiently communicated to governments.

What to watch next

  • Over the next few weeks, watch whether UK and European insurance regulators, including the Bank of England’s Prudential Regulation Authority and EIOPA, issue guidance or request new disclosures on how insurers assess physical climate risks.
  • Track insurers’ renewal notices and underwriting announcements for signs that they are restricting or withdrawing property coverage in climate-exposed areas.
  • Watch whether UK and European governments respond with policy proposals, public risk assessments or plans to address gaps in property insurance.
  • Look for the anonymous professionals’ group or other industry bodies to publish supporting data or specific recommendations that could clarify the scale of potential uninsured losses.

How it's being covered

Coverage analysisShow details
5 source articles · 5 unique outlets
Outlet political mix: Too few rated· 1 Left · 1 Center · 3 unrated
Where the outlets are based: Unknown 40% · US/Canada 20% · Other 40%
Outlet political mix
Too few rated
Left
Center
Right
1 outlet
1 outlet
0 outlets
The marker shows coverage balance: each unique outlet counts once. 3 unrated outlets are not included.
Geography
Where the outlets covering this story are based.
5 unique outletsDominant coverage: US/Canada
How we measure coverage

How outlets' accounts compare

Updat3 does not yet have enough full reports to compare how outlets framed this story.

Timeline

Developments from this story's sources, dated background we compiled and fact-checked, and our earlier coverage. Each row says which.
  1. Hurricane Andrew struck Florida and Louisiana on August 24, 1992, producing insured losses that contributed to the collapse of several insurers and prompted changes in catastrophe modeling and reinsurance.
    Background · from our historical context
  2. Hurricane Katrina made landfall in Louisiana, producing large insured losses.
    Background · compiled and fact-checked by Updat3
  3. In 2007, the Intergovernmental Panel on Climate Change’s Fourth Assessment Report concluded that warming was unequivocal and that increases in some types of extreme weather were consistent with a changing climate.
    Background · from our historical context
  4. The European Union adopted the Solvency II Directive, setting capital and risk-management requirements for insurers.
    Background · compiled and fact-checked by Updat3
  5. The Financial Stability Board established the Task Force on Climate-related Financial Disclosures.
    Background · compiled and fact-checked by Updat3
  6. The Solvency II Directive took effect in the European Union.
    Background · compiled and fact-checked by Updat3
  7. The Task Force on Climate-related Financial Disclosures issued recommendations for companies’ climate-related disclosures.
    Background · compiled and fact-checked by Updat3
  8. California’s insurance department announced a sustainable insurance strategy intended to encourage insurers to write more policies.
    Background · compiled and fact-checked by Updat3
  9. Insurers in several U.S. states pulled back from new home policies or sought large rate increases amid catastrophe losses.
    Background · compiled and fact-checked by Updat3

How we got here

In 2024, insurers in several U.S. states pulled back from new home policies or sought large rate increases as wildfire and other catastrophe losses grew.

California’s insurance department announced a sustainable insurance strategy in September 2023 after major insurers restricted new business in the state; the department said the strategy was intended to encourage insurers to write more policies.

Original sources

1 of 5 articles · US/Canada · Show all

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