Allianz warns: climate crisis leaves more assets without real insurance

Against the backdrop of one of the most extreme heatwaves in modern European history, one of the world's largest insurers is sending a worrying message: climate change is making more assets practically uninsurable. Günther Thallinger, a member of the Board of Management of "Allianz," warns that traditional insurance models are facing a structural crisis that could leave entire regions and sectors without adequate coverage.

"There are locations and risks that we can no longer cover"

In an interview published on Tuesday, Thallinger describes the limits of the insurance business in the face of increasing climate instability. According to him, "certain locations and risks cannot be insured to the extent we would like," and his conclusion is definitive: "There is nothing we can do."

He points out that heatwaves, floods, storms, and forest fires "could become so frequent that they threaten traditional insurance models." In such an environment, "risk-adequate pricing ceases to be affordable" – the premiums required to cover the actual risk become economically impossible for clients.

Deadly heatwave in Europe shows the scale of the problem

The Allianz warning comes against the backdrop of the atmospheric "heat dome" that settled over Europe at the end of June. Temperature records in France, the UK, Germany, and Spain were broken, with thermometers in a number of areas showing over 40°C.

In Spain alone, over 1,000 heat-related deaths were recorded during this extreme event, and the World Health Organization reported more than 1,300 "excess" deaths across the continent since June 21, as a direct result of the anomalous temperatures.

Researchers from the "World Weather Attribution" initiative found that in June, temperatures in France, Germany, Italy, Spain, and southern England were between 5 and 12°C above seasonal norms. According to their models, without the influence of human-caused fossil fuel emissions, this heatwave would have been approximately 4°C cooler.

The financial sector follows the insurers' lead

The refusal of insurance companies to take on excessive climate risks is already having an impact on the broader financial system. Carsten Brzeski, global head of macroeconomics at "ING Group," points out in an analysis for clients this week that heatwaves represent a "new downside risk" for economic growth in Europe.

According to him, the cumulative losses by 2029 could reach the equivalent of 0.8% of the EU's gross domestic product. This means that climate events not only destroy property and threaten human health but also gradually undermine growth and investment activity.

In Spain, the bank "BBVA" is already adapting lending terms for corporate clients depending on their exposure to global warming. The most affected sectors are "agriculture," "real estate," "leisure," "utilities," and "infrastructure," and products for retail clients are expected to be reviewed next.

Insurers criticized for their role in the climate crisis

In parallel with the alarming signals from major companies, the insurance sector is also coming under fire from critics. A report by the responsible investment organization "ShareAction," published on June 30, shows that the majority of the world's 40 largest property and casualty insurers are not adequately managing climate risks.

Only "Allianz" and the Dutch "Achmea" received a "B" rating – the highest score awarded within the analysis. Nevertheless, many companies continue to insure projects for the "expansion of fossil fuel extraction." According to the report, 73% of the insurers surveyed have no restrictions on insuring oil and gas expansion projects at the upstream stage.

"Insurance is meant to help people recover from the aftermath of disasters, but this report shows that many insurers are simply adding fuel to the fire," says Louise Marfani of "ShareAction."

"Without carbon neutrality, this will not work"

Allianz's Thallinger emphasizes that the consequences of inaction regarding the climate are obvious. "It is quite clear: without reaching carbon neutrality, this will not work," he says. According to him, without a significant reduction in emissions, attempts at adaptation become an "endless process" in which risks grow faster than management capabilities.

Thus, the message from one of the leading players in global insurance is two-fold: on one hand, the financial system is trying to protect itself from growing climate risks, and on the other – the sector itself must reconsider its role in the continued financing of fossil fuel projects. Otherwise, more homes, businesses, and infrastructure facilities may remain not just exposed to the elements, but also without real insurance protection.