In Florida, where this storm season cost an estimated $100bn (€94.6bn), premiums have soared and insurers have left the state, some going into liquidation. In the UK, the Bank of England estimates 4m UK homes could be uninsurable by 2030 and Australia’s Climate Council puts its figure at one in 25 homes.
Experts say we’re reaching a tipping point and insurance models need to change rapidly. “The weather system is much more volatile and that volatility is increasing. We’re seeing ‘threshold events’ – things that the models may not capture because they don’t exist in the historical record,” Sandy Trust, of Institute and Faculty of Actuaries, tells LinkedIn News.
The consequences for the wider economy are raising red flags. Governments are intervening as “insurers of last resort” but are looking at what’s next. “With insurance prices going up, they’re saying, ‘What do we do about this?'” says Trust. In Europe, the EU is exploring an “emergency backstop” for the insurance industry, and the French government recently kicked off a consultation on the problem. “Insurance is the invisible lubricant of the economy – it shouldn’t be left to fail,” Trust says.
Thinking will be not just on an individual scale but whether whole groups of people can access insurance. “The fundamental purpose of insurance is risk sharing and the question is how narrow a group you share with,” says actuary Lloyd Richards, FIA CERA CStat. “You can probably share things more equitably if you think globally rather than regionally.” Siobhan Morrin
💡As extreme weather events continue to worsen, what solutions might emerge to ensure broader access to insurance coverage? Weigh in using the hashtag #BigIdeas2025
