18 March 2026 - Insurability is one of the earliest signals of whether assets, sectors, and entire economies can survive the accelerating impacts of physical climate risk, according to a new briefing by ClimateWise.
The briefing, published today by the Cambridge Institute for Sustainability Leadership’s ClimateWise, is titled “The canary in the coalmine: Insurability as a resilience signal.” It warns that when insurance becomes unavailable or unaffordable, it triggers a "vulnerability spiral". This feeds into a domino effect that can quickly render assets unbankable and uninvestable, leading to systemic economic and social risks. To combat this, a shared language that enables the ecosystem to act to maintain and increase insurability is critical.
A Growing Global Exposure
This systemic risk is already manifesting globally, with natural disasters causing US$318 billion in losses in 2024 - 25% above the ten-year average. The briefing outlines how across the globe we are seeing:
- A widening protection gap: Over 50% of 2024 losses were uninsured, a figure projected to double by 2030 compared to 2023 levels.
- Fiscal strain: Governments are increasingly forced to backfill uninsured losses through debt and ad hoc aid, which is slower and less efficient than pre-arranged risk management.
- An inherent conflict: Despite clear risk signals, 57% of new homes in the US in 2023 and 11% of new homes in the UK between 2022-2024 were built in risk prone areas.
These factors collectively are leading to expanding challenges on insurability globally.
Two Sides to the Crisis
The briefing distinguishes between the "protection gaps" in emerging markets and the "market withdrawal" seen in advanced economies:
- Emerging Markets: In countries like Pakistan or the DRC, low insurance penetration (often below 1%) leads to economic recovery times four times longer than in high-penetration countries.
- Advanced Economies: In regions like California and the UK, there is a risk that insurers become compelled to exit high-risk markets, leading to mortgage and credit freezes.
But despite these different starting points to the crisis, the consequence – an economic domino effect where risks cascade across the economy – is a shared trap.
Towards a "Resilience Dividend"
Uninsurability is not an inevitable outcome of climate change; it is a function of today's policy and investment decisions. As a result, there are a number of levers available to us in order to support insurability, ranging from improved modelling and data availability to risk-informed development.
To support the pivot towards a resilience dividend, ClimateWise is developing an Insurability Readiness Matrix. This tool will provide a shared language for (re)insurers, policymakers, and regulators to identify components that underpin insurability as well as the levers - such as risk-informed development and resilience infrastructure - to maintain coverage.
Dr. Nina Seega – Director, Centre for Sustainable Finance, CISL, said:
“As physical climate impacts escalate, insurability has become a critical barometer of economic resilience. When assets become uninsurable, investment retreats and climate risk transforms into financial crisis. This briefing outlines why policymakers, financial institutions, and businesses must actively monitor changes in insurability. It marks the first step in our collaboration with the insurance industry to develop an Insurability Readiness Matrix: a shared framework that communicates these risks clearly and enables institutions to identify and activate the levers needed to maintain protection as climate risks intensify.”
Rachel Delhaise, Chief Sustainability Officer at Convex, said:
"Insurability is the ultimate signal for economic health, and this briefing shows why we need to keep that signal strong. I am delighted to be working with ClimateWise to develop the tools which will support the shift from a potential 'vulnerability spiral' of rising losses toward a 'resilience dividend'—where proactive adaptation and risk-informed development keep our communities and economies prosperous for the long term."
Jonathan Kassian, Head of Research at FloodRe, said:
“Insurability is something we can no longer take for granted, but this important new research will give policymakers a lens on how to plan and invest in order to keep the cycle of insurance, recovery and resilience intact over the longer term.”