Insurance is a major part of how we attempt to better deal with risk—but can it lead us to more viable ways to address climate issues? The picture is mixed.

The optimistic point of view is that insurance can play a major role in guiding businesses and individuals toward more climate-friendly decisions. In theory, insurers study the real probabilities of known hazards, and then figure out a viable premium that gives themselves a profit and the policyholders the agreed upon protection against the risk. 

When climate change raises the risks of flooding, business interruption and other insurance hazards, the premiums go up—which can lead, in theory, to their policyholders changing their behavior. Financing for a new factory, for example, can be prohibitive or even impossible to get, if insurers won't cover it.  

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