RADICAL REALIST

Few industries can offer humanity as much in the fight against climate change as insurance. It is the line of defence against rising waters and extreme heat, and among the first calls we make when things go wrong. In the coming decade, insured losses from natural disasters are expected to rise by between five and seven percent a year relative to global GDP, and Swiss Re has noted that 2025 marks the sixth consecutive year in which insured natural catastrophe losses exceeded $100bn.

These figures from an industry closest to the financial fault lines of climate change translate the ramifications of our inaction into numbers governments cannot dismiss. Yet the true cost of climate change will never be fully captured in balance sheets. No premium can compensate for memories lost to fire, the anguish of heat-linked miscarriages, or lives taken by floods and storms.

Last month, I had the opportunity to discuss the unique role the insurance sector can play in preparing society for the climate emergency with two people who understand both its power and its limitations. Amy Brettell is Managing Director of Zurich Municipal and Zurich Engineering, with almost two decades of experience across the industry. She is also a member of the Flood Action steering committee, a coalition which embodies the urgency for climate prevention and adaptation. We were joined by Peter Maurer, speaking in his personal capacity while drawing on a career that spans diplomacy and global governance.  As former President of the International Committee of the Red Cross, Swiss Secretary of State for Foreign Affairs, and a board member of Zurich Insurance, Maurer brought a rare vantage point on how climate risk intersects with conflict, displacement and political fragility.

Our conversation brought home that preventing climate change is not a future battle we need to prepare for, but a crisis that is already unfolding with deadly ramifications – too often we speak of “potential threats”, when for many, the threats have already manifested.

Insurance’s defining opportunity

Insurance has a uniquely powerful role in shaping a safer future – so I began by asking what they saw as the main threats and opportunities facing insurance today. Peter cautioned against the search for silver bullets. “One of the difficulties I have always had is zooming in too closely on singular solutions,” he told me. Climate change, he argued, demands a combination of tools, including finance, policy, prevention and social adaptation.

Peter Maurer, former President of the International Committee of the Red Cross, Swiss Secretary of State for Foreign Affairs, and a board member of Zurich Insurance

What struck me as the conversation unfolded was how naturally insurance frames climate change as a societal issue rather than a purely environmental one. Peter reflected on the industry’s unique relationship with data. “Insurance puts risk at the centre of action,” he said. The sector holds centuries of records on how societies absorb shocks, grounded in science and lived experience.

That long view reveals uncomfortable truths. Climate stress amplifies existing inequalities and tensions, making it increasingly difficult to disentangle environmental risk from social unrest. Amy pointed to data showing that above certain temperature the likelihood of riots rises sharply.

Displacement emerged as another critical theme. Amy referenced research showing that people forced from their homes are significantly more likely to anxiety and suicidal thoughts. This is where insurance’s preventive role becomes most powerful. “Insurers can use both carrots and sticks,” she said. Fire hydrants, sprinklers and building codes exist largely because insurance made them unavoidable. Behaviour changes when risk is priced honestly.

This logic sits at the heart of Flood Action, a pioneering coalition that seeks to harness nature as a force to fight climate change. Rather than responding only after disaster strikes, the programme brings insurers, local authorities and communities together to invest in nature-based solutions that reduce risk before it materialises. Insurers like Zurich have a critical role to play by helping channel capital into these preventive measures, recognising that resilience and insurability are inseparable.

If climate change is now the baseline, I asked, how should the industry respond? Amy was unequivocal. “Too often insurance is brought in at the end of the climate conversation, not the start,” she said. Insurance exists to help communities and organisations take risks, but that also means being clear about which risks are no longer acceptable. To do that, she argued, the industry needs to be more vocal and more assertive, and fight for its deserved place at the table to help influence positive action.

Amy Brettell is Managing Director of Zurich Municipal and Zurich Engineering

Peter acknowledged that the industry had perhaps been overly optimistic about its ability to mobilise political will for prevention. Japan, he noted, is a great example of what is possible when societal consensus exists. Earthquakes occur, but loss of life is minimised because buildings are designed to withstand them. That level of preparedness, he suggested, requires far more than market signals.

I have long believed that insurance must remain deeply actuarial while becoming proportionately innovative. I asked what that balance means for culture and talent within the sector. Amy did not hesitate. “Insurance has a brand problem,” she said plainly. Too few young people see it as a place to do meaningful, socially motivated work.

A quick look at the data suggests she is right. A 2024 survey found that half of UK insurance brokers are struggling to recruit staff under the age of 30, while around a quarter of the insurance workforce is expected to retire within the next decade. At a moment when risk is becoming more complex and more interconnected, the sector is in urgent need of fresh thinking and new perspectives.

Amy is emphatic about the industry’s social value. “I tell people not to apologise for the career you’re in,” she said. “We need to stand proud and get more people into the sector with creative ideas.”

That creativity, she believes, increasingly comes from outside traditional boundaries. Innovation today is often driven through partnerships rather than built entirely in-house. Amy pointed to Zurich’s work with startups and technology firms, while Peter suggested that insurance could also learn from the experimentation and blended finance models more commonly found in philanthropy and development finance.

Nuanced debate

I returned to a debate The Conduit hosted on whether insurers should withdraw entirely from high-risk areas. Amy had been asked to argue against the motion, but her actual view remains deliberately nuanced. “There will be no market left if insurers pull out of every high-risk area,” she said, noting that the world itself is becoming riskier. The answer, she argued, lies not in retreat but in public-private partnerships, better planning and smarter adaptation.

Peter warned that overly binary debates are a sign of danger. At the same time, he argued, societies cannot expect endless subsidies for rebuilding in places where risks are well understood and unchanged. The difficulty lies in having these conversations in political environments that have grown deeply polarised.

That point lingered with me. In a world where facts are increasingly contested, insurance is forced to deal in reality. When floods come, claims must be paid.

I asked how the industry can navigate this fractured landscape. Amy reflected on the pandemic, when governments, businesses and communities briefly acted with one voice. “Many more people will die from climate change than from COVID,” she said. Indeed, the WHO estimates that between 2030 and 2050 there will be an additional 250,000 deaths per year from climate change-related malaria and malnutrition. Direct costs to healthcare are projected to reach $4bn by the next decade. The challenge, Amy argued, is for insurance to help build that same sense of collective urgency to fight climate change as we did to save lives in the pandemic.

We ended by discussing leadership. “The humility of leadership is going to be increasingly important,” Amy said. No organisation can solve climate change alone. Leaders must convene, listen and create space for cooperation. Peter agreed, sharing advice he once received that leadership is not about doing things right, but about doing the right thing.

As our conversation closed, I was left with the deep insight that insurance is not merely about dealing with climate risk after catastrophe has hit: it is uniquely positioned to shape how we respond to emergencies, and collectively how we prevent disaster for future generations. In a warming world, the industry will either help societies adapt with foresight and fairness, or bear witness to the cost of our collective failure to do so.

In the weeks since our conversation, I’ve reflected a lot on the theme that real innovation in insurance happens through partnership. We already see this logic at work in places like New York City which is constructing flood barriers to protect against rising sea levels, and in Turkey, where safer building codes are reducing the human cost of earthquakes. These examples remind us that progress happens when risk, capital and collective action are brought into the same room.

This is precisely the purpose of The Conduit’s second annual conference on the future of insurance this April. It is designed as a convening for leaders across insurance, finance, government, technology and civil society to move beyond abstract debate and focus on practical solutions to shared problems. As Peter said during our conversation, leadership in insurance “is not about managing things right; it’s about whether you are moving things in the right direction.”