When Insurers Withdraw: How the climate crisis is changing the business landscape

Insurance companies worldwide are scaling back—or altogether withdrawing—coverage for extreme climate events such as floods, wildfires, and heatwaves. What was until recently regarded as an “exceptional event” is now increasingly understood as a recurring and foreseeable risk. The consequences are higher premiums, more stringent policy terms, and, in some regions, the complete uninsurability of business activities.

When insurers retreat, the message is unmistakable: climate risk is no longer exceptional—it is structural.

This shift is fundamentally transforming how businesses approach risk management. Insurance can no longer be taken for granted as a universal safety net; instead, it is becoming a privilege earned by those that invest in prevention and resilience. Facilities are being fortified against floods and fires, critical operations are decentralized, and supply chains are diversified to reduce exposure to localized extreme events.

At the same time, many companies are looking for alternative ways to finance risk. Self-insurance, insurance subsidiaries of large groups, and parametric insurance—with compensation triggered automatically when specific rainfall or temperature thresholds are exceeded—are gaining ground. In some cases, the risk is even transferred to the capital markets through special financial instruments.

The withdrawal of insurers exposes a deeper reality: the climate crisis is rewriting the rules of the economy, not merely the patterns of the weather.

Climate data now plays a pivotal role. Companies that systematically assess their exposure to future climate scenarios and embed climate risk into their investment decisions and strategic planning are viewed more favorably by insurers and investors alike. Those that fail to adapt, by contrast, face the growing risk of losing both insurance coverage and access to capital.

Climate risk is rising to the level of corporate governance. Boards of directors and senior executives are being called upon to demonstrate that they take seriously the impact of the climate crisis on business sustainability. At the same time, collective solutions are emerging, through public–private partnerships and joint investments in resilient infrastructure, particularly in high-risk areas.

In some cases, adaptation is not sufficient. Companies withdraw from highly exposed regions or radically change their business model. Insurability thus becomes a key indicator of long-term sustainability.

The withdrawal of insurers from covering extreme climate risks is not merely a problem for the insurance sector. It reflects a deeper shift in the economic system, in which the climate crisis is redefining cost, risk, and ultimately who can continue to operate.

RiskClima by E-ON INTEGRATION comes to provide solutions and meet prevention requirements. It is an innovative software solution that helps businesses map their exposure to future scenarios and integrate climate risk into their investment and strategic planning. This contributes to more favorable treatment by insurers and investors.