In an era marked by accelerating climate volatility, a new report warns that the concept of insurability is fast becoming a central – if under-recognised – factor in the financial viability of businesses, sectors and entire regions.

Released this week by Howden, the international insurance group, The Insurability Imperative argues that access to insurance is no longer a back-office consideration but a forward-looking signal of whether a project, portfolio or public policy is fit for the future.

At the heart of the report is a provocative premise: if an asset is no longer insurable, it may no longer be investable. As global insurance markets respond to rising losses and mounting uncertainty, the implications are not confined to premiums – they touch on capital allocation, credit flows and strategic risk governance across both private and public domains.

Insurability reflects how well risks are understood, managed and shared and it is becoming a financial language in its own right—one that boards, investors and policymakers cannot afford to ignore.

The report’s publication comes amid a spate of high-profile insurance withdrawals from coastal zones in the United States, southern Europe and parts of Australia. In many of these regions, mounting claims from floods, fires and other extreme weather events have pushed insurers beyond their risk appetite or solvency limits, prompting sharp price increases or outright exits from the market.

This recalibration has caught the attention of investors. Institutional capital is increasingly sensitive to the availability and cost of insurance as a proxy for long-term asset performance. In parallel, regulators from central banks to climate supervisory bodies are examining the role of insurance in financial stability frameworks.

What emerges, according to Howden, is a new hierarchy of value: organisations that remain insurable are more likely to remain investible—not simply because they can access cover, but because they demonstrate resilience, governance and forward-looking risk management.

The report introduces Howden’s “Climate Insurability Framework,” which sets out four levers for sustaining and enhancing insurability: risk modelling, risk management, risk sharing, and policy alignment.

These may sound familiar to climate and finance professionals, but the framing is novel. Insurance, in this context, is not treated merely as a market for risk transfer. Instead, it is positioned as a signalling system—one that reflects real-time judgments about the quality of data, preparedness, and exposure across complex systems.

For instance, the report details how metrics such as Annual Average Loss (AAL) and Probable Maximum Loss (PML)—long used by insurers to calibrate risk—are becoming decision-making tools for asset managers, CFOs and city planners. Understanding how insurers think, it suggests, is now a boardroom competency.

A recurring theme is the inadequacy of late-stage thinking. The report warns against relegating insurance to the end of a development process, when cover is either unobtainable or prohibitively expensive. Instead, it advocates for a proactive approach—where insurance logic is integrated into strategy, procurement, infrastructure design and capital planning from the outset.

This view echoes trends seen in sectors as diverse as agriculture, energy and sovereign finance. A case study included in the report examines the mounting insurability challenges in European agriculture, where rising climate losses and underinsurance threaten not just food security but also the functioning of credit and subsidy systems. The authors call for public-private collaboration, enhanced data infrastructure and the introduction of blended capital structures such as catastrophe bonds and sovereign pools.

Perhaps most pointedly, the report calls on governments to treat insurance not as a cost-sharing mechanism, but as a policy lever. Zoning laws, building codes, tax incentives and climate disclosure regimes all affect whether risk is ultimately insurable—or whether it will fall back on public balance sheets through disaster aid and reconstruction spending.

“Regulation can either support or undermine insurability,” the report notes. “When it aligns with climate science and risk models, it becomes a force multiplier. When it doesn’t, it distorts the market and increases systemic exposure.”

While the protection gap—the difference between economic and insured losses—continues to widen globally, the report remains cautiously optimistic. It sees an opportunity for business and government to reshape insurance as a tool not just of recovery, but of readiness.

Whether that opportunity is seized may depend on how quickly leaders elevate insurance from a transactional concern to a strategic one. If the message of the report is distilled to a single idea, it is this: insurability is no longer a symptom—it’s a signal.

The Insurability Imperative: Using Insurance to Navigate the Climate Transition

https://www.howdengroup.com/uk-en/insurability-climate-report-2025