Allianz on climate risk and the future of insurability
As Chief Underwriting Officer at Allianz Ireland, John Ryan brings a frontline perspective from one of the world’s leading insurers. With operations globally, Allianz is seeing firsthand how climate change is accelerating risk, disrupting coverage, and raising fundamental questions about the future insurability of assets. In this conversation, John Ryan explores why climate risk is now a systemic threat to both insurers and banks, how Allianz is responding, and why the path forward depends on urgent adaptation and cross-sector collaboration.
Peter Kinahan:
Hello everybody, and welcome. Today I’m with John Ryan of Allianz. John, how are you today?
John Ryan:
Very good, Peter, thanks very much.
Peter:
Great. For our banking audience, what we’re trying to do today is get everybody alert to how the insurance industry is actually highly relevant to banking risk.
John, you’re Chief Underwriting Officer with Allianz Ireland. You’ve also got a board of management responsibility for sustainability. Is that correct?
John:
Yeah, that’s correct. I took over responsibility for sustainability just earlier this year, but I’ve been heavily involved now for the last few years.
Peter:
Okay. Yeah. So, despite some rollbacks, which we might talk about later, it’s still extremely important, and especially directly important in your industry.
One of the things we’re pretty clear on, and anybody looking out the window can see, is that climate risk and catastrophe risk are on the rise. It has certainly changed the outlook for the insurance industry.
We’re particularly pleased to have a representative from Allianz because earlier this year, the head office board issued a white paper, which had a fairly electrifying effect on the systemic risk posed by climate risk.
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Climate risk is now a core business risk
Peter:
How would you say climate risk and catastrophe risk have changed the outlook for the insurance industry over the past few years? And what’s ahead?
John:
It’s absolutely changed in the last decade. If we even just think back to last year, 2024, that was the hottest year on record since global temperatures were first recorded in 1880. And that just overtook 2023.
So 2023 was the hottest year, and then 2024 stepped up again. It was one and a half degrees hotter than it had been in the pre-industrial era. And it’s not just those two years, the last decade, the ten-year average, is also up. It’s the warmest decade on record.
So it’s not just isolated years, it’s a clear trend. It’s absolutely undeniable that climate change is here, and it’s really having an effect.
In terms of how that’s translating into insurance losses: in 2024, adjusted for inflation, global insurance losses were 75% up versus the 30-year average. That’s a huge increase.
If you take the last 10 years of losses, again adjusted for inflation, they’re up about 30% versus the previous decades. So there’s a significant step-change upward, and the more recent years are really starting to rack up.
That trend isn’t going away. The expectation from the experts is that losses will continue to increase as we move forward. So yes, the landscape has changed dramatically, and it’s really important now that we act quickly to mitigate the effects, but also to adapt to the new reality.
SDGs: The challenge for leaders
From higher premiums to uninsurability
Peter:
Okay, so this will obviously be reflected in premiums which are becoming more and more onerous for businesses. And there’s really not too much that’s going to change there in the short term.
That’s one way it’s affecting business. But that’s where you can actually insure something. The word that’s coming up more and more is “uninsurability.”
What are the implications of that? Because it seems like more and more places are either on the borderline or have gone over the line in terms of insurability. How real is that as a threat and the risk it poses?
John:
Absolutely. We’re seeing in certain U.S. states that there are risks now that are just uninsurable from a natural catastrophe perspective. That exposure is increasing.
But it’s not just about insurance. Obviously, as the cost of natural catastrophes increases, that affects premiums. But there are wider impacts on businesses too like increased disruption beyond the insurance loss itself.
There are supply chain disruptions, for example. If a business depends on supplies from a region impacted by these events, there will be knock-on effects.
In terms of insurability, yes, some areas and some specific perils are becoming more uninsurable. Here in Ireland, for example, the biggest threat we face is rising sea levels. That’s a fact. Sea levels will continue to rise.
So any coastal communities or communities vulnerable to that are at higher risk of insurance losses or even uninsurability in the future, unless we adapt to the climate we now face.
That’s a key area where insurers, government, developers, and planning authorities need to respond. We need to adapt both from a planning point of view and in terms of how we adapt the existing building stock in Ireland and elsewhere.
Nature risk and finance: A growing challenge
Why insurers and banks face shared exposure
Peter:
Okay, so a couple of things we’ve discussed so far. We have rising premiums. We also have straight-up uninsurability, where you can’t get insurance at all.
And then rising premiums can make insurance unaffordable, which leads to less coverage.
John:
And that’s where we need to push in the other direction. Prevention is better than cure.
We can’t keep building in areas that are exposed to flood, wildfire, or other specific perils. From a planning perspective, we need to be more thoughtful about where we build.
We also need to look at how we adapt existing buildings, how we can mitigate the effects of the increased risks.
Cleanup and reinstatement costs are much higher than prevention. So the focus for the insurance industry, government, developers, and policymakers must be on adaptation and resilience.
From a banking point of view, the risk is also real. Existing assets like mortgaged properties are under increasing threat.
If a customer is seeking a mortgage in a flood-prone area, that becomes an issue not just for personal customers, but also commercial ones.
This isn’t just an insurance issue, it’s a societal issue. All stakeholders need to be involved to build up resilience and adapt infrastructure, buildings, and flood defenses.
At the same time, we must mitigate future effects as much as possible.
Allianz’s climate strategy in action
Peter:
And how do you go about that? Do you lobby government or authorities?
And secondly, in terms of the banking industry and that threat to asset values, do you think the industry is truly aware of the systemic risk posed by uninsurability?
John:
First, in terms of our own operations, everyone needs to play their part and lead by example.
We’re reducing our own emissions. We’re looking at our own energy consumption, retrofitting, switching to green energy, and moving toward heat pumps for heating.
We’ve electrified our fleet and are reducing travel emissions.
From a product point of view, we’re incentivizing customers to live more sustainably through our product design. For example, in our household insurance, we offer building energy rating discounts. So, if you’ve retrofitted/upgraded your home and it’s more energy-efficient, you pay a lower premium.
On the motor side, we’re incentivizing customers who commute less, reflecting hybrid working. If you drive less, you reduce both carbon emissions and insurance risk.
We’ve also added benefits, like if you have a large home claim (over €50,000), we add €6,000 to go toward energy-efficient upgrades. It’s a chance to rebuild better.
In motor claims, we’ve introduced a green parts initiative where customers can reduce their excess by choosing recycled, high-quality parts. That’s been well-received.
Then, on the policy side: we’re running two major initiatives.
1. Climate Safe Homes research project – This is a pioneering program to make Irish homes more climate-resilient. It includes several research workstreams aimed at guiding national policy, developers, and homeowners. It’s not commercial, it’s about creating a shared framework for future-proofing homes.
2. Flood Risk Mitigation – We’re working with Insurance Ireland and local government to develop a grant scheme to help homeowners install flood defences like barriers, dryproofing, and non-return valves.
It’s similar to home energy grants but focused on flood resilience. This protects both asset values and lives.
Flash flooding is also becoming a bigger issue, not just coastal flood. With warmer air, there’s more moisture, and rainfall events are more intense. We saw this in Spain recently. These types of events are increasing.
Banks roll back climate commitments
The bigger picture: Policy, rollbacks, and what’s next
Peter:
Okay, so the insurance industry knows there’s a problem and is taking action to modify behavior.
On the banking side, there seems to be some retreat from certain commitments, like the Net-Zero Banking Alliance and similar efforts.
Just to wrap up: what are your thoughts on these rollbacks of climate change commitments and disclosure requirements? Do you think that will change again? And how important is it to keep the pressure on?
John:
Yeah, look, it’s hugely important that we keep the pressure on and keep driving forward.
Some of the rollback announcements aren’t what we want to hear, but we should reflect on the progress made.
Ten years ago, global energy investments were about 45% clean energy versus 55% fossil fuels. Now it’s 64% clean energy, 36% fossil fuels.
So even with some rollbacks, the trend is positive.
There’s a real opportunity for jurisdictions to accelerate investment in renewables. It will provide a competitive advantage, particularly in a highly electrified economy.
Yes, we’ve had hurdles; planning, infrastructure, but they’re being worked through. I believe momentum will continue to accelerate.
As for disclosure: some are saying we need to focus more on action than on reporting and metrics. The key now is execution, rolling out infrastructure, adaptation, and mitigation efforts.
Peter:
Well, I suppose the main message is: let’s hope it all works out. Because from a banking point of view, if you can’t insure it, you can’t lend against it. So those kinds of effects are very real.
John:
Thanks very much, Peter.
