The world has always been dangerous. It’s why insurance has, since its
emergence, been so crucial to the resilience of our societies. So, to say that
we once lived in times when there were no risks waiting round the corner isn’t
true. But there was a time when the weather obeyed the rules of the seasons, and
crises were more rare.
That time has gone. The planet is hotter and wilder, and the costs – human and
financial – of the harm caused by the weather events related to this brutal fact
are rising. Floods,
fires
and increasingly intense
storms are
battering even wealthy countries once thought to be robust and well-protected.
This is the new normal.
Faced with this situation, insurers must accept that the old assumptions about
risk, response, recoverability and the sheer rarity of disasters don’t hold.
Some may pull back, others rethink how they look to cover regions particularly
vulnerable to climate-related
crises.
But what none can afford to do, in every sense of the word, is wait for things
to calm down.
The standard insurance model relies on probabilities. It assumes, in effect,
that most years will be largely uneventful — that damaging events will be few
and far between. Disasters these days aren’t just more frequent and more serious
but overlapping and impossible to predict on the basis of old data. They disrupt
everything, from logistics to labour markets to the power supply. One event
bleeds into another, and the consequences go far beyond the initial damage
caused.
Asked to underwrite a world they no longer
grasp,
insurers find themselves stuck on one side of a yawning protection gap — which
describes the distance between the cost of a disaster and what can, in
actuality, be covered. The bridge across that divide will not be made of the
stuff that worked in the past.
The future of insurance is not just in paying out after disaster but in helping
clients sidestep it before it strikes. In other words: Resilience. And this
shift is in fact already underway, thanks to technology. Integrated insurance
systems exploit gains in satellite technology, artificial intelligence,
cybersecurity and other areas to provide holistic risk-management
platforms that can address
all the interlocking, overlapping risks companies and property owners are facing
at the same time.
With respect to climate-related risks specifically, these platforms make use of
geospatial
tech
— which makes satellite imagery intelligible through AI — to provide
up-to-the-minute information on
floods,
wildfires
and more. The upshot is that businesses know their vulnerabilities with a
greater level of precision than before; in some cases, they can be notified of
impending disaster and then take evasive or preventative action — for example,
clearing away brush has been shown to be effective in reducing the spread of
wildfires.
It should go without saying that the predict-and-prevent approach saves money.
Some estimates put the amount saved by a single euro of investment in prevention
at between €5 to €7. The human and emotional cost can’t be quantified, but it’s
easy to imagine the distress. And this is part of the point. At best, insurance
is a public good — something that underwrites risk so that society can function
smoothly. Simply withdrawing from the frontlines of climate change would entail
ceding ground to extreme volatility and condemning people to living
ever-more-cautious lives.
But this isn’t, in fact, a revolution in insurance — it’s more like a return to
first principles. With our help, individuals and businesses can face risk, make
calculated decisions about the future, absorb shocks and carry on. The
difference is that now, the risks are bigger, and the tools we use to address
them must be more advanced.
Last year was the first time global land temperatures crossed
1.5°C
above pre-industrial levels. That figure, once held up as a red line, was passed
with little fuss or fanfare. It will be passed again. Until we can implement
solutions to stop global warming and then reverse it, we must lean on technology
and strategies that mitigate the harm that it causes. Insurers must rise to the
challenge of climate change — and increasingly, they can.
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CEO, AXA Digital Commercial Platform
Axa
Pierre du Rostu is CEO of AXA Digital Commercial Platform. He was central to the development of a first-of-its-kind, AI-powered risk-management system which combines monitoring, training, state-of-the-art software solutions and other resources to enable organizations to predict, prevent and respond to a range of interconnected risks.
Published Aug 15, 2025 8am EDT / 5am PDT / 1pm BST / 2pm CEST