Insurance Industry Faces $600 Billion Climate Loss Over 20 Years—Here’s What’s Behind the Shocking Figures

Over the past 20 years, more than one-third of weather-related insurance losses have been attributed to climate change.

The global insurance industry has incurred losses totaling $600 billion due to climate change. These losses account for over one-third of all weather-related claims, including those for crop disasters and flooding.

The global campaign network Insure Our Future, which advocates for the insurance industry to address climate change, released its 2024 scorecard report, WITHIN OUR POWER: Cut Emissions Today to Insure Tomorrow, on Tuesday.

The report analyzed climate change’s significant impact on the global insurance industry.

The report highlighted that for four Asian insurers—MS&AD, Ping An, Samsung Fire & Marine, and Tokio Marine—climate-related losses ($1.62 billion) exceeded the premiums they received from the coal, oil, and gas sectors ($1.26 billion).

On average, premiums from the fossil fuel industry account for less than 2% of total premiums. The findings emphasize the urgency of halting fossil fuel insurance to prevent the growing climate risks in 98% of their business portfolios.

The share of climate change-related losses has risen from an annual average of 31% to 38% over the past decade. The report, which analyzed 28 global non-life insurers (excluding two that did not meet the criteria), estimated that climate-related losses ($10.6 billion) nearly matched the direct premiums ($11.3 billion) received from commercial fossil fuel clients in 2023.

Italian insurer Generali ranked first among the evaluated companies, introducing the first comprehensive fossil fuel restriction policy covering the entire oil and gas value chain in October. However, the report suggests that effective climate action across the industry has stagnated.

The Insure Our Future Scorecard assesses 30 major global insurers on their fossil fuel exclusion policies, emission reduction targets for existing operations, and human rights compliance in underwriting policies.

For divestment policies, the evaluation considers the scope of investment restrictions on fossil fuel companies and asset types, scoring and ranking insurers in both underwriting and investment categories.

While global renewable energy investments have more than doubled fossil fuel investments, insurance coverage for renewables stands at $6.5 billion, only about 30% of the total fossil fuel insurance market.

According to Ilan Noy, a climate economist at Victoria University of Wellington, insurers have misunderstood climate risks by failing to grasp how greenhouse gas emissions have increased their losses over the century. He warned that climate damage could grow exponentially unless emissions are drastically reduced within this decade, overwhelming insurers and the economy.

Bangladeshi climate activist and report author Risalat Khan questioned, “If heatwaves in Bangladesh, India, and Pakistan surpass the limits of human survival, who will insure these people?” He emphasized that the insurance industry stands at a crossroads. Instead of enabling unaffordable coal, oil, and gas expansion, insurers must expand affordable coverage for those in need.