Against the background of intensifying physical climate risks, today the Cambridge Institute for Sustainability Leadership (CISL) is launching the ClimateWise Insurability Readiness Matrix, a first of its kind early warning and engagement tool to help insurers better assess and communicate the insurability of locations and projects to financiers, corporates and policymakers.
Natural disasters caused US$318 billion in losses in 2024, 25 per cent above the ten-year average, with over half of those losses uninsured. Detailed in the report “The ClimateWise Insurability Readiness Matrix: A shared language for action,” the tool enables stakeholders to propose the precise levers needed to halt declining coverage, supporting coordinated action across the industry to help protect vulnerable communities from a widening insurance gap.
A crisis that affects everyone
Insurability represents a threshold where insurance is available and affordable. As extreme weather events intensify, insurability is emerging as one of the most important resilience signals. When insurance coverage is restricted, becomes unaffordable, or withdraws entirely, it creates an economic domino effect. Lenders cannot issue mortgages or loans against uninsured collateral, property values and tax bases decline, investment flees, and municipal finances come under strain. Disaster recovery becomes slower, costlier, and reliant on ad hoc government aid, driving financial inequality. The Insurability Readiness Matrix is designed to diagnose these bottlenecks and help (re)insurers to communicate them before the market retreats.
Future insurability challenges are not an inevitable outcome of climate change, but a function of policy and investment choices made today. An ecosystem-wide approach is needed to ensure that vulnerable places are not left in the lurch following severe flooding, wildfires, or extreme weather. The Matrix serves as the practical catalyst for this collaboration at the outset of the project rather than when it is already too late. By providing a common language across seven components which drive insurability, the Matrix allows businesses, governments, and communities to work together to proactively invest in resilience, reduce risk, maintain affordable insurance, and reinforce the conditions for further adaptation, ultimately support a resilience dividend.
How the Insurability Readiness Matrix works
The Insurability Readiness Matrix is designed as a structured diagnostic and engagement tool. It evaluates insurability across seven critical components: Data and Modelling, Physical Resilience, Policy Alignment, Market Capital and Capacity, Stakeholder Awareness and Financial Literacy, Accessibility and Affordability, and Recovery Ecosystem. It evaluates insurability by assigning each of its seven core components a traffic-light status: Red (materially undermining insurability), Amber (under pressure), or Green (adequate to support insurability). Crucially, these ratings are accompanied by a forward-looking trend signal - indicating whether the risk is improving, stable, or declining - and specific "Pathways to Green" that map out the targeted interventions and key stakeholders required to restore or maintain coverage.
Who it is for: The primary users of the Matrix are insurers and reinsurers, who draw on their underwriting knowledge and available data to complete the assessment. The primary audiences for its outputs are project financiers, developers, regulators, and policymakers. These stakeholders can use the Matrix outputs to inform early-stage project design, long-term development planning, credit risk assessments, and targeted policy interventions.
How it was developed: The Matrix was developed through a multi-stage research process combining cross-sector convenings across the (re)insurance, banking, academia, and civil society sectors, alongside a literature review and industry survey. The framework was tested in a pilot programme where insurers applied the Matrix to real-world scenarios - including floods in Tenbury Wells and Hull, wildfires in Yorkshire and Los Angeles, and agriculture in Sub-Saharan Africa.
Download the report here
Dr Nina Seega, Director of the Centre for Sustainable Finance at CISL, said:
“In 2024, more than half of the world's natural disaster losses went uninsured. That is not just an insurance problem, it is a financial stability problem, a development problem, and ultimately a climate resilience problem. The Insurability Readiness Matrix is our contribution to solving it: a structured diagnostic tool that assesses the conditions driving insurability across seven components, from physical resilience and policy alignment to market capital and affordability, giving insurers, financiers and policymakers a shared language to identify where coverage is under pressure and what targeted action is needed to maintain it. Crucially, the Matrix connects directly to the recent work of our Banking Environment Initiative on 'Resilience-Adjusted Credit Risk', allowing lenders to systematically integrate these insurability and adaptation conditions into their own credit risk assessments.”
Rachel Delhaise, Chief Sustainability Officer at Convex, said:
“As insurers, we are well used to managing catastrophe risk, despite the increasing uncertainty associated with the impacts of climate change. However, as physical risks escalate in highly vulnerable areas, maintaining accessible coverage can be increasingly complex for the entire ecosystem. The Insurability Readiness Matrix offers a framework that supports earlier, more collaborative engagement. By clearly identifying the factors that drive coverage decisions—whether that is physical resilience or local policy alignment—it creates a shared understanding, making it easier for developers, governments, and the broader industry to explore how communities can remain protected and markets viable.”
Jonathan Kassian, Head of Research at Flood Re, said:
“ClimateWise’s Insurability Readiness Matrix gives decision-makers a tool to understand the risk factors that drive the full cost of insurance. Programs like Flood Re make sure those at greatest risk can still obtain insurance at affordable prices, but they do not remove the underlying risk – though our Build Back Better program is trying to improve this. In some other places, the subsidy equation is becoming untenable because of the underlying risks. Using ClimateWise’s tool can provide an early warning and assessment to address the underlying drivers to maintain insurability.”
Liz Henderson, Global Head of Climate Risk Advisory at Aon, said:
“To maintain the insurability of physical assets in a changing climate, it is essential that there is a two-way dialogue between the insurance industry and stakeholders on risk mitigation. To drive this process, the Insurability Readiness Matrix is a powerful diagnostic tool that delivers data-driven risk profiles of individual assets, outlining the physical, regulatory, and market factors that can cause coverage pressures. Using a shared language, it helps to move conversations toward the practical steps that asset owners and local governments can take to improve their risk profiles and secure long-term resilience.”