Climate Change & Insurance: Existential Threat—or Extraordinary Opportunity?

By Bryant Rousseau

With additional reporting by Phil Gusman, Chad Hemenway, Melissa Hillebrand, Anya Khalamayzer, Shawn Moynihan, Arthur D. Postal, Mark Ruquet and Laura Toops 

Few—if any—industries would seem to face a greater existential threat from the effects of climate change than insurance. As flood waters rise, as hurricanes and tornadoes grow more intense and as droughts last longer, trillions of dollars of insured assets are at risk. In the ugliest scenario imaginable, even the most solvent, best-managed carriers are overwhelmed by catastrophe claims and driven into bankruptcy. The insurance industry, as we know it, ceases operations.

While voices at the extreme doom-and-gloom end of the spectrum see such a future as a distinct possibility, the consensus view of the impact climate change will have on the industry is far more complex—and significantly less dire. Indeed, many observers actually see enormous opportunities for the industry as the world responds to a warming planet.