Executive summary

Physical climate risks are exceeding insurable limits in many regions, threatening coverage availability and affordability. Over the last 20 years, insured losses have increased by an average of 5-7% per year. Current trends indicate that insured losses could reach $148 billion in 2026 and as much as $186 billion by 2030. The insurance sector is increasingly moving beyond its historical role as a risk carrier to become a climate resilience partner, with over 200 adaptation and resilience (A&R) measures identified across underwriting, pricing, advisory, investment, and partnerships.

Context

Climate change is driving more frequent and severe hazards, with the estimated annual cost of physical climate risks to the world’s largest companies reaching $1.2 trillion by the 2050s. Over the past decade, average uninsured annual losses reached $267 billion, representing a global protection gap of 58%. While insurance serves as a pillar of financial resilience through shock absorption, recovery, and risk signalling, rising losses are jeopardising the sector’s ability to act as a safety net. Consequently, the industry is evolving from paying for losses to reducing risk and enabling adaptation.

Methodology

The research mapped and analysed existing insurance-led A&R measures to deliver systemic insights. This involved a comprehensive desk research mapping of existing literature and reports, over 30 interviews with industry practitioners, and the identification of more than 200 A&R measures. The analysis was further strengthened by 25 case studies, with a specific focus on resilient oceans and coastal communities, to explore the replicability and scalability of these measures across the sector.

A&R taxonomy

The toolkit provides a practical taxonomy of A&R measures categorised into six primary areas: Risk Transfer Products, Incentive-based Mechanisms, Risk Assessment, Advisory & Tools, Research & Education, Corporate Commitments, and Funding & Investment Activities. Risk transfer products, such as parametric insurance and catastrophe bonds, are essential for absorbing losses, though their contribution to long-term adaptation depends on integration with risk reduction. Incentive-based mechanisms, including risk-based pricing and resilient rebuilding endorsements, drive investment by aligning financial signals with behavioural change.

Insights

Structural barriers to scaling A&R measures include misaligned organisational strategies, internal silos, and unresolved economics regarding the allocation of costs and returns. Regulatory environments often remain anchored in traditional indemnity models, which can stall innovation. Enabling conditions for success include coordinated action and strategic partnerships, the use of climate intelligence and analytics for decision-making, and long-term engagement to align behavioural and financial incentives.

Resilient oceans

Healthy oceans are essential for global prosperity, with the blue economy generating an annual value of $3 trillion and supporting 100 million jobs worldwide. However, coastal communities face significant risks from rising sea levels and extreme weather. The report suggests moving beyond disaster coverage to address chronic risks, closing the ocean data gap to unlock risk modelling, and leveraging public-private partnerships to scale innovative insurance models such as coral reef and mangrove protection.

Case library

The report includes an index of 25 A&R measures informed by practitioner interviews. These include parametric forest protection in Mexico, anticipatory payments in the Philippines, and resilient repair programmes in the United Kingdom. These case studies demonstrate how innovative solutions are being implemented to address key risks and strengthen outcomes for both ecosystems and livelihoods across diverse geographic contexts.

Conclusion

Scaling climate adaptation requires a coordinated effort across all stakeholders. Insurers, reinsurers, and brokers are called to embed resilience analytics and risk reduction incentives into products and processes. Regulators should evolve frameworks to support long-term outcomes, while philanthropies and development finance must de-risk early-stage solutions. Ultimately, progress depends on shifting insurance from a standalone compensation mechanism to an integrated component of wider resilience systems.