2025 Reports

Climate Change, Cities, and Insurance

Meyer, Peter B.; Sushchenko, Oleksandr; Schwarze, Reimund

As climate change intensifies, unprecedented climate risk increasingly strains markets and drives insurers to reassess coverage strategies. The insurance sector must navigate an evolving relationship between climate risk, cities’ needs, and emerging coverage strategies. This paper identifies five key functions of climate insurance and argues that insurance must evolve beyond reactive compensation toward proactive risk mitigation and investment in climate resilience. By fostering collaboration between insurers, municipalities, and financial institutions, the sector can play a pivotal role in redirecting global capital toward sustainable urban adaptation, securing equitable and long-term protection against climate-driven disasters.

Keywords: climate finance, insurance, climate risk