Article

The quiet catalyst: How insurance can help de-risk and implement climate resilience

An upbeat mood prevailed at London Climate Action Week 2025, where nature-based solutions and the insurability challenge were among the hot topics of discussion.

London Climate Action Week is now in its seventh year, and this was by far the busiest iteration I've ever been to. There was a notable increase in activity and attendance. With two-hour queues for some events, and widespread competition for tickets, the growing significance of this UK event was palpable.

It was not only levels of activity that were high, but also the sense of optimism. In light of recent policy shifts around the world, one might have expected the mood to be more somber compared to last year. However, the upbeat energy on the ground told a different story.

Moving ahead with confidence

Across the week’s events, the trend towards an increasing focus on adaptation continued, alongside the transition to net zero. I was struck by a distinct focus on implementation: moving from designing solutions to actually financing and deploying them. One phrase that echoed through the week was “this is the implementation decade”.

A roundtable hosted by Marsh and Oliver Wyman brought together representatives from government, insurance, asset management, and banking to explore the UK’s need for transition financing, and the role insurance can play. For example, insurers are responding to business demand for support for new business models and technologies.

On both the transition and adaptation, insurance has a key role in creating solutions that help to catalyze implementation by de-risking investment in a way that unlocks finance.

Quantifying the benefits of nature-based solutions

The theme of nature was very present in London, including at our webinar on harnessing nature for resilience and how the insurance community can help to bridge the nature finance gap. We are really starting to see a focus on how to quantify nature’s value and make the business case for funding nature-based projects — from urban parks to alleviate the impact of heatwaves, to mangroves for protection against coastal flooding.

Insurance can play an important role in developing real-world solutions. One way to quantify the benefits of nature-based solutions, for example, is to integrate them into catastrophe models. The reduced risk can potentially lead to lower insurance premiums and improved access to insurance for vulnerable areas.

De-risking climate adaptation and resilience

I was glad to take part in an interesting roundtable on adaptation and resilience, where leaders from insurance, finance, and government explored how to encourage investment in climate adaptation — an especially critical need for vulnerable areas. It clearly emerged from the discussion that there is no “one size fits all” solution; rather, tailored solutions are needed based on regional and contextual factors.

In developed markets, for instance, there is growing concern about access to insurance, particularly the changing availability and affordability of coverage as extreme weather risks increase. Insurance is a widely used mechanism in developed markets, but it needs to evolve further to effectively incorporate adaptation measures.

Many emerging markets, however, face a dual challenge: they not only experience pressure on the availability of insurance because of increasing risks, but also contend with low insurance penetration overall. In regions where insurance is not already widely used, it is important to address this protection gap by designing products that meet local needs.

Three key roles for the insurance sector

During discussions at London Climate Action Week, three key approaches emerged for the insurance sector to tackle the challenges of the protection gap and insurability:

Leveraging and extending the existing mechanism of reinsurance pools: Historically, reinsurance pools have covered risks associated with natural disasters such as earthquakes. There is now an opportunity to adapt these mechanisms to address increasingly significant extreme weather risks, such as floods and wildfires.
Supporting resilience in vulnerable areas: It is important to assist cities, regions, and countries that face either a perceived or an actual resilience deficit. This support can help prevent foreign investment flows from being diverted to lower-risk locations, a concern that is increasing as organizations become more adept at identifying climate-related vulnerabilities in their supply chains. Empowering these areas to implement resilience and adaptation measures while raising awareness about the importance of resilience investments.
Promoting micro-insurance solutions: At the most vulnerable end of the spectrum, micro-insurance is helping to close the insurance protection gap. For example, Blue Marble — co-founded by Marsh McLennan and a number of leading insurers — focuses on supporting vulnerable communities, such as smallholder farmers and small-scale entrepreneurs, by offering innovative, affordable, and targeted parametric insurance solutions in emerging markets.

Insurance’s role on the journey to Belém

At any major climate gathering, there is always an eye on the next opportunity to make meaningful progress. In London, there was a general sense of anticipation that COP30 — to be held in Belém, Brazil, towards the end of the year — has the potential to become a significant milestone.

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