Climate change drives $600b in insured losses over 20 years

28 leading global insurers saw climate-related losses reach $10.6b.

Climate change has accounted for $600b in insured weather-related losses globally over the past two decades, representing over a third of such losses, according to Insure Our Future’s report. 

Climate-attributed losses grew from 31% to 38% of total insured weather losses over the last decade, outpacing total losses in annual growth at 6.5% compared to 4.9%.  

The report, “Within Our Power”, highlights insurers’ reliance on policyholders to absorb these growing costs while continuing to underwrite fossil fuel projects that drive climate risks. 

An analysis of 28 leading global insurers shows their climate-related losses, estimated at $10.6b, nearly equaled the $11.3b in premiums earned from fossil fuel clients in 2023. 

In Europe, insurers such as Allianz, AXA, and Zurich saw climate-related losses of $3.23b exceed the $2.2b in premiums they collected from coal, oil, and gas businesses.

The report also underscores the risks tied to fossil fuel underwriting. Seven European insurers, including Generali, have taken steps to reduce fossil fuel exposure, with Generali adopting the industry’s first policy covering the entire oil and gas value chain in October. 

Despite such moves, the overall commercial fossil fuel insurance market remains much larger than the renewable energy insurance market, valued at $22 billion versus $6.5 billion, respectively.  

The report calls for urgent action from insurers, regulators, and governments to address these escalating risks. 

Key recommendations include mandating 1.5°C-aligned transition plans, requiring scenario analysis of climate-related risks, and ensuring insurers adopt policies to mitigate their role in exacerbating climate impacts. 

The findings come as the global average temperature is expected to breach the critical 1.5°C threshold in 2024, amplifying risks worldwide. 

Recent disasters, such as $190m in losses from Storm Henk in the UK and deadly floods in Valencia, Spain, illustrate the rising human and financial toll of climate change.  

Experts warn that unless emissions are sharply reduced, climate-related damages could overwhelm insurers and economies. 

“The evidence is undeniable — climate change represents an existential risk for the insurance industry,” wrote former California insurance commissioner Dave Jones and senior actuary Dr. Louise Pryor in the report’s foreword.