Climate Risk & the Insurability Crisis

In some markets, a homeowner who fits storm shutters is rewarded with a higher insurance premium. The house is now worth more, so it costs more to cover. A participant offered the example at Laura Fox and Michael Langguth's Ripple on insurability, and it summed up the problem the session kept returning to. Climate losses are rising fast, and almost nobody along the chain is paid to reduce them.

Laura, of Streetlife Ventures, brought the numbers. Natural disasters caused about $220bn of losses last year, around half of them insured. A quarter of Europe's losses of the past 45 years came in the last four. Events once seen as minor now make up 90% of losses. The hot European summer of 2025 caused more than $40bn of economic losses, of which only $500m was insured. In a recent diligence, three of six asset owners told Laura they were tired of hearing about once-in-a-generation risks. They wanted help with the losses happening around them all the time.

Losses on the factory floor

A participant who had spent years assessing factories in Asia described a worker with a broom, posted at the door to push out floodwater during downpours, and effluent plants that overflow. Business interruption cover has been hard to build, Laura said. AXA had told Laura that a product it tried for extreme heat was very hard to scale. Water is the other side of it. A large European pulp and paper maker used to lose its water supply in Spain and France for a couple of hours each summer. Now it loses it for a month and a half.

Nobody is paid to adapt

Agriculture showed the incentive problem most clearly. Food buyers leave the yield risk with producers, so the buyers have no business case for adaptation, an adaptation investor said. Buyers diversify their sourcing instead, which only postpones the problem. The investor wanted agriculture to learn from health cover. "Health insurance basically insures a depreciating asset in the form of a body," they said. Good health insurers reward behaviour that slows the depreciation and know how well interventions work. Farming has no such rating, so an intervention earns no extra cover. Another participant said a large brewer doing regenerative agriculture had admitted it was not in its interest, since it buys on the commodity market and others gain too. Price caps on producers in many markets in Africa leave little money for adaptation.

The incentives are no better for big assets. Large insurers had told one participant that they insure the construction of projects they expect to be uninsurable within five years, when construction takes four. The founder of a company that inspects utility equipment said many utilities do not know the condition of assets installed 30 to 50 years ago. They accept the highest premiums, which pushes up rates and leaves less money for the grid.

Any data acquisition investment today is likely to be outgunned by something that's better tomorrow.

Proof as a product

Michael, of Carbon13, sorted the opportunities into five areas, from climate-risk intelligence and physical fixes to new insurance models, resilience measurement and recovery. Measurement mattered most in what followed. A Carbon13 company began by helping homeowners cut wildfire risk and found that, to get paid, it had to become the system of record that proves to insurers the work was done. Many US insurers have stopped covering roofs, Laura said. Streetlife backed a managing general agent built on a roof product that a longitudinal study in Alabama, validated by the building-safety institute IBHS, found cuts the risk of a roof blowing off in hurricanes, high wind or hail by 80%. The proven risk cut earns a lower premium up front, where homeowners normally learn their price only after the work is done.

Generic analytics were a harder sell. One investor had seen 20 to 30 climate-risk platforms selling satellite or drone data to insurers and found no differentiation. The same investor was warming to claims, because filing one after a house burns down is still a nightmare even for the insured. Laura pointed to Dorothy and Bright Harbor as companies working on it. Another investor said the cost of collecting data keeps falling. "Any data acquisition investment today is likely to be outgunned by something that's better tomorrow," the investor said. That investor recalled Fathom, a flood-modelling university spin-out whose hard science gave it a moat until Swiss Re bought it.

Shared benefits are hardest of all. Laura would like to invest in coastal defences but said they do not pay off at building level. In Lower Manhattan, a consortium modelled on a business improvement district has building owners pay into a common fund for such work.

That left the question one participant asked outright. If a physical fix mainly benefits the insurer, should its maker become a data provider, or wait for a middle layer that prices risk reduction? The utility founder pointed to California, where regulators now make utilities record every step from inspection to replacement, a rule since copied by Hawaii, Nevada, Washington State, Texas, Colorado and Wyoming. The founder expected insurers to start using that evidence too. Michael wanted the link made earlier still, with insurance and de-risking built into a project's financing from the start of construction.

This Ripple was hosted by Laura Fox (Streetlife Ventures) and Michael Langguth (Carbon13) at The Drop 2026 on 16 September.