Major economies risk becoming uninsurable due to worsening natural disasters triggered by climate change and the loss of natural habits, according to a new report by environmental group WWF.
“The exponentially growing losses and damages from extreme weather events that are undermining the insurance market, are caused both by increasing temperature and the destruction of ecosystems that are protecting us”, said Kirsten Schuijt, director general of WWF International.
WWF warned that climate change and nature loss are rapidly eroding the foundations of global insurance markets, threatening not only households and businesses but also public finance budgets and a stable economy.
The European Central Bank has warned that insurance firms face a rising threat from the physical risks of climate change which could become a source of systemic risk.
The costs of global disasters total US$2.3tn annually, including indirect and ecosystem losses, according to the UN Office for Disaster Risk Reduction.
Insurance markets in major economies are struggling to absorb these losses, WWF said, noting that US insurance premiums for homeowners have risen 38% since 2019. In Europe, only 20% of catastrophe losses are insured, and in Australia one in six households now spends more than a month’s income on insurance premiums, according to WWF.
“As insurers raise premiums, restrict coverage, or withdraw from high-risk regions, governments are being forced to step in as insurers of last resort – adding pressure to already limited public budgets,” the report said.
WWF noted that the German, Spanish and US governments have had to pay billions in disaster assistance after recent floods, hurricanes and tornadoes.
“This is no longer just an insurance market issue, but a systemic threat to people’s livelihoods, economic resilience and even financial and fiscal stability,” said Laurence Tubiana, special envoy to Europe for Cop30.
WWF urged policymakers and financial regulators to cut emissions and reverse nature loss, conduct risk and resilience assessments, and strengthen regulatory oversight.
The group also called on governments to recognise that protecting nature is a efficient way to increase resilience, noting that Switzerland has estimated the value of its forests in preventing floods at $4.5bn annually, 25 times more cost-effective than alternatives such as built infrastructure.
“Forests, mangroves or wetlands are crucial for reducing the devastating impact of these extreme events and therefore need to be at heart of the strategies to increase our resilience and keep regions insurable,” said Schuijt.
This page was last updated November 10, 2025