Insurance sector faces operational and climate-related risks

The insurance industry is confronting significant challenges regarding operational resilience and climate change vulnerability. Experts warn that while insurers focus on solvency and regulatory requirements, they may be underestimating systemic operational risks. A failure in core systems—such as those caused by ransomware, critical technology provider outages, or errors in artificial intelligence models—could render even solvent companies unable to serve clients.

Simultaneously, the increasing frequency and severity of climate-related disasters are creating a protection gap. Rather than building long-term strategic resilience, many insurers are responding to physical risks by raising premiums, restricting coverage for specific events like wildfires and floods, or withdrawing from high-risk geographic regions and sectors entirely. This shift leaves the financial burden of climate damages to governments, taxpayers, and the general public.