I’m worried about insurance.
Some homes are becoming uninsurable due to the rapidly escalating impacts of the climate crisis. And that should worry you too, even if you think your home is safe enough.
Lack of insurance doesn’t just mean the foundation of a homeowner’s security can be wiped out in an instant by a flood, wildfire or hurricane. Insurance is also the “invisible backbone” of modern economies: without its support, loans fail and the financial system crumbles. That means that insurance is now one of the most vital fronts in the battle with global heating.
As Felicity Alvey, of the University of Cambridge’s Institute for Sustainability Leadership, put it to me: “We’re seeing more frequent, more severe extreme weather events and that inevitably affects claims and affects pricing – it can’t not. And this is happening all over the globe.”
More, after this week’s most important reads.
Essential reads
Under water, in denial: is Europe drowning out the climate crisis?
The Great Olympic lie: untold story of Winter Games’ huge environmental impact
‘It’s more exciting than Tesco’: can traditional fishing lure Cornwall’s young people?
In focus
Accelerating climate risks are already driving up insurance premiums across the US, especially in the fiery west and hurricane-prone south-east. Commercial insurers are pulling out, leaving the state-backed insurers of last resort carrying the can, such as California Fair Plan (pdf), which has seen its exposure soar by 230% to $724bn since 2022. In Spain and Portugal, both hammered by extraordinary rains since the start of the year, governments have had to provide billions of euros in aid.
The western UK has also been drenched since the new year: the poor souls of one Cornish village have had 50 straight days of rain. This has prompted warnings of the emergence of “mortgage prisoners”, people who cannot sell because their homes are too flood-prone to insure, and fears of banks facing rising defaults.
And the climate crisis is just getting started. Scientists this week estimated that the number of people exposed to flood risk will rise by 25% on China’s Pearl River delta by 2035, even if carbon emissions start to be cut: that region, which includes Hong Kong, is home to 86 million people.
So, an insurance crisis is a crisis for both individuals and society. “Insurance protects the things that people have worked incredibly hard for,” Alvey told me. “It provides financial stability in moments of shock that mean that people can carry on with their lives.”
At the biggest scale, one top insurer has warned that the climate crisis is on track to destroy capitalism itself, with the vast cost of extreme weather impacts leaving the financial sector unable to operate. “Entire regions are becoming uninsurable,” said Günther Thallinger, an Allianz SE board member, last year.
He is far from alone in his concern. The International Association of Insurance Supervisors, a group of regulators from across the globe, said in November: “A reduction in the insurability of assets linked to bank lending could lead to systemic risk and financial instability.”
Alvey says there is a risk of a domino effect: insurance fails, banks suffer, investors pull out and the state is left to pick up the pieces – if it can. A telling example came in south Wales earlier this month, when a local authority was forced to spend millions of pounds buying out the residents of 16 terraced homes that could no longer be defended from flooding.
Even if you escape injury from flooding, the trauma of seeing your home inundated with filthy water is profound and long-lasting. I have spoken to flood victims who for years feel panic every time it rains.
So what can be done? One solution has been pioneered in the UK. The scheme, called Flood Re, is a government and industry partnership that uses a small levy on everyone’s premiums to keep them affordable for those in flood risk areas. Without this, those premiums would run to thousands of pounds a year, with the excesses in the tens of thousands. More than 600,000 homes have benefited since Flood Re started in 2016.
Tracey Garrett of the National Flood Forum, says: “It was a real-life life-saver for a lot of people, but we’re concerned now because Flood Re will end in 2039 and most mortgages already go way past 2039.” The idea was that a combination of new flood defences and better flood protection in houses would mean that insurance for these homes would be affordable by then.
But this isn’t happening fast enough. Flood Re’s boss said last July that the UK’s flood resilience had actually deteriorated, leaving hundreds of thousands of homes at risk of becoming uninsurable in 2039. “We’re storing up a massive problem for people in the future,” says Garrett. (Building 44,000 new homes in flood risk areas of England from 2022-2024 clearly doesn’t help.)
Kelly Ostler-Coyle, Flood Re’s director of corporate affairs, says the next five to 10 years are crucial: “We’re working hard to help the UK live better with water – building resilience and making sure recovery after floods is quicker and less disruptive.”
That includes promoting protection, such as self-closing air bricks to keep water out and putting electrics higher on walls. “Whether it’s government, insurers, households, Flood Re, local councils, or water companies, we’ve all got a role in facing up to the realities of living with water.”
We should also not forget that many people in the world have never been able to afford insurance, even as the climate crisis increases the need for it. The Insurance Development Forum’s programmes helped provide financial protection to 4 million people in 2025, but there’s a very long way to go.
A final thought: insurers are pre-eminent experts in risk – it is their core skill, honed over many decades. So when their warnings that the climate crisis could make cover for ordinary people unaffordable start coming to pass, it really is time to act.
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