Climate Change

Innovating for Climate Resilience: Flexibility, Technology, and Tailored Solutions in Focus

Key Findings

68% of global insurers and 64% of UK insurers are making moderate adjustments to their resource management strategies to handle extreme weather events.
69% of UK insurers prioritise technology investments to enhance operational efficiency during downtimes between catastrophic (CAT) events.
Despite rising temperatures, more than half of UK insurers have not observed an increase in heat-related claims.
58% of UK insurers expect climate trends to necessitate adjustments in insurance coverage and risk assessments.
There is growing demand for climate-specific insurance products, according to 60% of UK insurers.

Stepping up with scalable solutions for growing climate challenges

The UK has experienced notable changes in weather patterns over recent years. Heavy rainfall events have become more frequent, often leading to flash floods, while rising sea levels and storm surges continue to pose threats to coastal areas. At the same time, heatwaves are growing in both frequency and intensity. Globally, major natural disasters have risen by 39% over the last three years.^[¹^]These evolving conditions require organisations to develop robust strategies to address the associated challenges, including damage control and population displacement.

In response, 68% of global insurers are moderately adjusting their resource management strategies, particularly to enhance preparedness during downtimes between CAT events. UK insurers are aligned with this global trend, with 64% reporting the same. There is also a significant shift towards adopting flexible and scalable resource models, as reported by 16% of UK insurers, surpassing the global response of 13%. A proactive stance is essential for the effective management of the increasing demands created by extreme weather events, while ensuring resilience and adaptability to safeguard long-term outcomes.

Advanced technologies and cross-training: Key strategies to navigate CAT events

Downtimes between CAT events can significantly impact productivity and profitability. As such, many strategies are being employed to mitigate the effects. Our survey shows that 69% of UK and two-thirds of global insurers (66%) are prioritising investments in technology to enhance operational efficiency as their best practice during these periods. This indicates that insurers are increasingly recognising the value of leveraging advanced technologies, such as AI-driven analytics and cloud-based systems, to improve decision-making and response times, reducing operational disruption during and after CAT events.

By investing in advanced technologies such as automation and data-driven insights, insurers can refine risk assessments, improve claims response, and build resilience — ultimately strengthening trust and customer loyalty.

In addition to technology, maintaining workforce flexibility is emerging as a key strategy. While over half of global insurers rely on contract adjusters to manage claims surges, UK

insurers favour cross-training employees, with 60% of respondents adopting this approach. Cross-training enables insurers to optimise resources, minimise downtime, and increase employee engagement, providing a cost-effective way to boost adaptability.

In the UK, temperatures are climbing at an alarming rate. The record-breaking mean air temperature and marine temperatures in June 2023 resulted in marine heatwaves surrounding the UK during Spring and into June 2024.^[²^] Despite these trends, the majority of UK insurers (58%) have not observed a significant increase in heat-related claims.

Globally, however, 47% of insurers report a moderate to significant rise in the frequency of such claims, while just over a quarter (26%) of UK insurers noted similar increases in claims linked to heat stress or heat-related illnesses. This disparity suggests that climate impacts remain highly localised, depending on regional and sector-specific factors. Moreover, it underscores the importance for insurers to continue monitoring climate patterns and their influence on claims to adapt and refine risk management strategies accordingly.

Proactive risk management and the shift towards tailored insurance solutions

The evolving risks associated with extreme weather events are driving insurers to reassess their risk management strategies. In both the UK and globally, around 58% of insurers anticipate that climate trends will require adjustments to insurance coverage and risk assessments. Nearly half of UK respondents also highlighted the importance of collaborating with external experts to address climate-related risks effectively.

At the same time, investment in health and safety training programmes is emerging as another key strategy, with 42% of UK insurers adopting this approach. These efforts are complemented by broader resilience measures, including infrastructure upgrades, supply chain diversification, and contingency planning.

Demand for climate-specific insurance products is also rising. More than half (60%) of UK insurers report increased demand for such products, reflecting a six-percentage point rise compared to last year. This trend highlights the growing importance of tailored coverage solutions to help clients manage the increasing risks posed by extreme weather events and long-term climate shifts.

Building resilience through innovation

The growing impact of climate-related events underscores the urgency for the insurance industry to adopt innovative and future-focused strategies. Enhancing resource flexibility, embracing technology-driven solutions, and expanding climate-specific insurance products are key measures to address these challenges. By aligning with these priorities, insurers can better prepare for emerging risks, meet evolving customer demands, and establish robust systems to protect people, property, and communities.

Partnering with experienced experts in claims and risk management is vital to tackle these complexities effectively. This collaborative effort not only strengthens the industry's ability to respond to escalating climate challenges but also drives sustainable innovation and resilience for the future of insurance.

^{[1] Ukpanah, Inemesit. “}^{Extreme Weather in the UK: In-Depth Analysis}^{”, Green Match, Updated 30 Sept 2024.}
^{[2] “}^{The unbelievable May that had everyone talking}^{”, Met Office, 17 Sept 2024}