Even as political resistance to net-zero policies has intensified in the US and UK - highlighted on Tuesday by environmental advocates suing the Trump administration over what they described as a secretive plan to undermine climate science - some of the world’s largest insurers have stood by their climate transition plans, presenting them as essential not only for long-term environmental goals but also for managing the growing financial risks tied to extreme weather.
Aviva chief executive Dame Amanda Blanc (pictured) reaffirmed the company’s position this week, pointing to the rising costs from climate-linked disasters. “It’s about protecting our clients, but it’s also about managing the very real financial risks that come with extreme weather - floods in the UK, wildfires in Canada, and the growing frequency of events that threaten the insurability of homes and businesses,” she said. Her comments came as Aviva reported a 22% increase in half-year operating profit to £1 billion, driven by growth in general insurance premiums in the UK and Ireland and stronger inflows into its wealth division. The results lifted Aviva’s shares 4.7% to about £6.90, their highest since before the 2008 financial crisis.
While some in the financial sector have scaled back climate commitments in recent months, leaders within the insurance industry argue that adaptation is becoming inseparable from profitability. At Marsh, Beverly Adams, head of climate and catastrophe resilience, said many clients had invested heavily in climate adaptation measures - ranging from flood defenses to wildfire mitigation - and now want those efforts reflected in their insurance terms. “We’re seeing many of our clients who’ve modeled their risks, built out resilience playbooks, and made real strategic investments in climate adaptation,” she said. “Now they’re asking: where’s the recognition from insurers?” Adams believes the London market is uniquely placed to lead on resilience underwriting, with its history of innovation, ties to government policy, and early adoption of climate disclosure frameworks.
Allianz has taken a similar approach, embedding climate strategy into its growth agenda. “2024 was a challenging year, with severe natural catastrophes making it the third most expensive year on record for insurers globally,” said Emilia Macarie, the company’s chief sustainability officer. “Yet, less than 50% of these losses were insured… Despite these challenges, we have stayed the course on our sustainability commitments, integrating them into our business, and protecting and growing our customers’ assets through innovative solutions and adaptation measures.”
This determination stands in contrast to a number of major financial institutions that have withdrawn from the UN-backed Net-Zero Banking Alliance in recent months, including JPMorgan, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, HSBC, and Barclays.
In the US, the political swings on environmental regulation are complicating the picture for the industry. Tanya Andolsen, president of Argosy Risk Specialists, said the change from Trump to Biden and back again had created uncertainty in pricing and risk assessment, particularly for site-specific environmental coverage. “It’s been a constant back-and-forth; we went from Trump to Biden and now back to Trump, and each administration has vastly different views,” she said. “Loosened standards could make it harder to define potential liabilities, creating more ambiguity in underwriting and pricing.”
That regulatory turbulence is now being tested in the courts. This week, the Environmental Defence Fund and the Union of Concerned Scientists filed a lawsuit accusing the Trump administration of orchestrating a secretive plan to undermine climate science. The suit targets a Department of Energy report that questioned the reliability of climate models and suggested carbon dioxide-driven warming might be less economically damaging than commonly believed.
As Adams put it, the challenge is “not only pricing risk, but pricing resilience.” Or, as one senior London market broker summed it up, “Politics can change every four years. The climate doesn’t wait.”
