Climate Change & Environment Conference 2025

The increased frequency of natural events, such as floods, wildfires, and convective storms, is challenging insurance affordability. Rising risks are not only driven by intensifying extreme weather but also by socioeconomic choices made by different stakeholders. Poor land zoning, outdated building codes, ageing infrastructure, and inadequate urban planning all amplify exposure and vulnerability. 

Addressing these challenges requires an all-of-society effort. Investing in the resilience of homes, commercial and industrial assets, and infrastructure systems is vital for public safety, economic stability, and national security.  Entrepreneurial drive will also be essential to advancing climate solutions as well as collective action to tackle affordability challenges.
 

Global natural catastrophe losses are rising 5–7% annually, yet only around 43% are insured. A shift from compensating post-disaster losses to promoting prevention is needed to enhance resilience to extreme weather. Targeted prevention yields exponential socioeconomic returns. Following Hurricane Katrina, for example, the US invested USD 14.6 billion in levees and flood defences. When Ida struck in 2021, those investments helped to limit damage and losses.

Innovation and incentives are important enablers of resilience. Technology and data innovation allow risk insights to inform targeted prevention investments. Equally vital are risk-based pricing to focus on where risks must be reduced or avoided, and modern building codes and urban-planning standards that reward resilience and deter high-risk development.

Finally, true climate resilience demands shared responsibility, with governments enforcing zoning and updated building standards; businesses and builders designing for resilience; homeowners retrofitting; and insurers deploying data, capital, and innovation. If pursued at scale, prevention and collaboration can transform risk itself.
 

Resilience should be embedded in every aspect of asset planning, design, and investment, rather than added only after the fact. This can be achieved via a three-pronged approach: building resiliently from the start, retrofitting existing assets, and creating a resilience culture through incentives and clearer market signals. However, persistent challenges include fragmented regulations, slow policy developments for the adoption of new building codes, and deep stakeholder fragmentation. A systemic approach that addresses issues such as housing, energy, and critical infrastructure and promotes cross-sector collaboration, with responsibility shared between governments, insurers, industry, and communities, will be essential to overcoming these challenges. 

The insurance sector is becoming an active strategic partner, offering risk analytics, preventive solutions underpinned by evidence-based research (e.g. through centres such as the Institute for Business and Home Safety in the US), and innovative products to promote resilience. Despite notable successes around the world, underinsurance and behavioural biases persist, which demand collective solutions and stronger societal engagement. 
 

Balancing wildfire risk reduction with housing affordability and consumer preferences is challenging due to cost-of-living concerns, inadequate incentives, and lack of decision-relevant risk information. However, successful examples of wildfire-resilient community design and management exist, from California to Australia and Europe. 

Innovation is pivotal for early fire detection and targeted responses. Examples include cameras and sensors used for early detection, suppression via drone swarms, resilient materials and construction methods, and coordination platforms with government and agencies. Scaling prevention technologies, however, face barriers to collective action and market fragmentation.

Insurers are integrating risk awareness and local solutions into underwriting and investment approaches. Emerging local innovations, supportive financial mechanisms, and increasing cross-sector collaboration are all promising developments.
 

Prevention must be the new default when it comes to extreme weather risks. Societies can no longer afford to spend trillions reacting to disasters that could have been avoided through smarter design, planning, and investment. Building resilience should be seen not as a cost but as a value proposition that safeguards lives, livelihoods, and economic stability. Insurers have a key role to play through risk-based pricing and prevention incentives.

Building resilience at scale requires alignment among governments, businesses, investors, and communities. Public policies, regulations, and financing mechanisms must prioritise prevention. Insurance is uniquely positioned to drive smarter decisions.

Finally, innovation is key to accelerating resilience. AI-driven wildfire detection, satellite-based risk mapping, and resilient building materials, for example, are transforming how risks are anticipated and managed. Innovative thinking can inspire policies and partnerships that encourage experimentation and promote progress.