A new report by Ceres, a nonprofit advocacy organization, found that while insurers in the United States have made notable progress on disclosing their climate-related strategies and risk management, many are falling short of setting verifiable targets and taking action.
What is climate risk management in the insurance sector?
Insurers conduct climate risk assessments to understand how the increasing frequency and severity of extreme weather events will impact their financial stability, operations, customer base, and stakeholders. Many have employed technological tools, such as catastrophe modeling and data mining, to gain more insight into how rising global temperatures will impact specific regions and better predict future losses.
These assessments form the basis of risk mitigation strategies, which may include offering additional coverage or discounts to customers who implement risk-reducing measures — such as installing flood defenses or an impact-resistant roof — or adjusting pricing or restricting coverage to reflect the increased liability of doing business in areas most vulnerable to climate disasters.
With record-breaking weather events causing nearly $183 billion in damages in the United States last year, according to the National Oceanic and Atmospheric Administration, insurers appear to be well aware of the importance of ramping up risk mitigation efforts.
While Ceres’ 2025 Progress Report revealed that the 526 insurance groups analyzed had made improvements in reporting their risk management process over the past few years, just 29% disclosed targets and metrics in 2024.
Ceres explained that this is “a critical gap that limits the industry’s ability to demonstrate measurable progress against financial stability goals driven by growing climate risk.”
Why is it important for insurers to implement climate solutions?
With natural disasters leaving more and more homeowners to choose between unaffordable insurance or simply going without, in some cases, there’s an urgent need for insurance agencies to move “from disclosure to action,” as Ceres put it.
“The continuing low performance in the metrics and targets area represents an urgent concern,” the report stated. “Without measurable targets and metrics, stakeholders cannot effectively assess insurers’ progress or hold companies accountable for their climate risk goals.”
Setting tangible targets and implementing a solid transition plan benefits both insurers and customers, as companies will be in a much better position to mitigate the risks society faces from the shifting climate.
While rising global temperatures pose unprecedented challenges for the insurance industry, they also present opportunities to contribute to a more sustainable future.
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Tackling the problem may be expensive, but the cost of doing nothing is far greater. Research by the University of Cambridge climaTRACES Lab and Boston Consulting Group found that failing to act on climate mitigation would reduce cumulative GDP by 11% to 27%, while investing a mere 1-2% in adaptation and preparedness would limit economic damages to just 2-4% of global GDP.
What actions did Ceres recommend insurers take?
The report emphasized critical areas for insurers and the overall industry to focus on, which include developing “robust measurement frameworks,” setting science-backed targets with clear timelines, improving pollution disclosure practices, and creating detailed climate transition plans.
“Insurers are the risk managers of the economy and uniquely positioned to mitigate the financial impacts of a changing climate,” Laura Zizzo, founder and chief strategy officer at Manifest Climate, an AI-powered climate platform that conducted the analysis, said in a news release. “To lead effectively, they must set the standard with clear, decision-useful disclosures — and demand the same from the companies they underwrite and invest in.”
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Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.