Insurance pullback coming as climate risk grows and ‘entire regions’ could get uninsurable: report

[LONDON] Insurers are withdrawing coverage for climate-driven risks and increasingly passing on losses to governments and homeowners, according to a report published by UK-based nonprofit Inside Track.

The warning adds to concerns voiced publicly by others in the industry.

In September, Aviva chief executive officer Amanda Blanc said homes being built in the UK today already face uninsurability due to rising flood risks.

And Günther Thallinger, a director at Allianz, has said that “entire regions” risk becoming uninsurable due to climate change. 

According to the report by Inside Track, which is based on information provided by two dozen senior insurance professionals in the UK and the rest of Europe, some of the retreat “has already begun and will now accelerate”.

The result will be “an increase in uninsured losses for which someone else will have to pay the price”, said the report, which was published on Wednesday (Oct 14).

There are also concerns that risks are currently being mispriced, according to the report, which included a commentary by Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.  

“The people who price risk for a living are warning, from the inside, that our models have underestimated the danger,” he said. “And that mispriced risk is building to potentially unmanageable levels.” 

A spokesperson for the Association of British Insurers said the industry invests “significantly” in understanding the risks it faces, including through scenario analysis and risk assessments.

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“However, resilience cannot be delivered by insurers alone and requires action from across government, industry, and society as a whole,” the spokesperson said, adding that insurers are subject to “robust” regulation to ensure they can withstand significant economic shocks. 

A spokesperson for Insurance Europe was not immediately able to respond.

Anthony Hobley, who until recently was the deputy chair for climate risk and resilience at Howden Group Holdings, wrote in a recent LinkedIn post that the insurance industry has the best “forward view” of physical risk.

But it mostly deploys that expertise in the form of one-year insurance policies.

“Our pricing skill is only ever deployed twelve months at a time,” he said. “It does not help clients manage risk over the long term, or stay insurable.”

Property insurers have already scaled back – or even cancelled – policies for wildfire losses in California, and for hurricane risk in Florida and Louisiana.

In Europe, only a quarter of natural catastrophe losses are currently covered, leaving the continent facing “a new risk paradigm”, according to the European Insurance and Occupational Pensions Authority.

The Bank of England noted in 2025 that insurers are “not always consistent” in how they value assets and liabilities when incorporating climate-related risk.

Inside Track, which was established in early 2025 as a forum for insiders to safely share their accounts, says on its website that it validates the insights it gathers through its own research, while protecting participants’ identities.

Bloomberg interviewed some of the insurance insiders who contributed to the report, all of whom spoke on condition of anonymity. BLOOMBERG