Insuring Against Extreme Heat: Navigating Risks in a Warming World

The report highlights that extreme heat kills approximately 489,000 people annually and could reduce the world economy by $23 trillion by 2050. It argues that the insurance industry must shift from reactive post-event funding to proactive risk mitigation, utilizing parametric insurance, AI-driven predictive modelling, and nature-based solutions to close the global insurance protection gap, which stood at 74.3% in 2023.

• Extreme heat is the deadliest climate risk, causing an estimated 489,000 deaths annually, which exceeds the combined death toll of earthquakes, hurricanes, and floods.
• The economic impact of extreme heat is projected to be severe, with potential world economy reductions of $23 trillion by 2050 and annual productivity losses of $2.4 trillion by 2030.
• A significant global insurance protection gap exists, with 74.3% of climate-related disasters in 2023 remaining uninsured, amounting to approximately $385 billion in damages.
• The insurance industry is facing unsustainable financial pressure, with 2024 projected as the fifth consecutive year of net underwriting losses exceeding $100 billion.
• Parametric insurance, which triggers payouts based on predefined event thresholds rather than documented losses, is identified as a key tool for providing fast financial relief to vulnerable populations.
• Nature-based solutions (NBS), such as urban tree canopies and green roofs, are 50% more cost-effective than traditional grey infrastructure and provide 28% more added value.
• Workforce exposure to extreme heat is highly uneven geographically; 93% of workers in Africa and over 83% in the Arabian Peninsula are exposed, compared to approximately 10% in North America.
• In California, the combination of wildfire risk and regulatory challenges has led to the emergence of 'insurance deserts,' where major providers limit new customers or discontinue policies.
• The United Nations estimates that $3.1 billion is needed over the next five years to strengthen early warning systems, particularly in the Global South.

APA

World Economic Forum (2025). Insuring Against Extreme Heat: Navigating Risks in a Warming World. https://reports.weforum.org/docs/WEF_Insuring_Against_Extreme_Heat_Navigating_Risks_in_a_Warming_World_2025.pdf

Chicago

World Economic Forum. Insuring Against Extreme Heat: Navigating Risks in a Warming World. 2025. https://reports.weforum.org/docs/WEF_Insuring_Against_Extreme_Heat_Navigating_Risks_in_a_Warming_World_2025.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Insuring Against Extreme Heat: Navigating Risks in a Warming World |date=January 2025 |url=https://reports.weforum.org/docs/WEF_Insuring_Against_Extreme_Heat_Navigating_Risks_in_a_Warming_World_2025.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2025insuring, author = {{World Economic Forum}}, title = {{Insuring Against Extreme Heat: Navigating Risks in a Warming World}}, institution = {World Economic Forum}, year = {2025}, month = jan, url = {https://reports.weforum.org/docs/WEF_Insuring_Against_Extreme_Heat_Navigating_Risks_in_a_Warming_World_2025.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }