A top insurance executive is sounding the alarm on the growing risks of increasing global temperatures — not just to our ecosystems but also to our economy. As extreme weather intensifies and the costs stack up, the foundations of our systems could start to crack under pressure.
What's happening?
Günther Thallinger, board member at insurance and financial services company Allianz SE, said the premiums needed to cover the risks of increasing temperatures and related ripple effects are too high for customers to afford.
"Entire regions are becoming uninsurable," Thallinger wrote on LinkedIn, per The New York Times, calling this a "systemic risk that threatens the very foundation of the financial sector."
"Capitalism as we know it ceases to be viable," Thallinger added.
What is the climate-induced economic crisis?
The climate-induced economic crisis refers to the financial fallout from worsening climate disasters such as wildfires, floods, and heat waves.
These events can cause significant damage to homes, infrastructure, and farmland, which in turn increases insurance prices, drives down property values, and disrupts communities.
According to the Times, the impacts of global warming could exceed $38 trillion per year by 2049, per research at the Potsdam Institute for Climate Impact Research.
In the U.S. alone, climate risks may wipe out $1.5 trillion in property value by 2055 due to flooding and other growing hazards, according to First Street, as cited by the Times.
Why the climate-induced economic crisis matters now
Without homeowners insurance, banks may not issue mortgages. That can mean no buying, selling, or refinancing homes, which would drag down neighborhood wealth and cut funding for schools, hospitals, and emergency services.
Per the Times, ETH Zurich researchers warned that a global temperature rise of 3 degrees Celsius (5.4 degrees Fahrenheit) — a fairly likely outcome without swift action — could shrink global economic output by 10%.
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Definitely 👍 How this crisis hits home
In places such as California and Florida, some homeowners are already being priced out of insurance.
A warming climate isn't just hitting housing; it's also making food, electricity, and water more expensive, straining budgets across the country.
Some communities are pushing back. Cities are planting trees and installing cool roofs to fight extreme heat.
Families are investing in weatherized homes to cut energy costs.
By upgrading insulation, sealing air leaks, and installing efficient heating systems, homeowners can reduce their energy bills and take advantage of rebates.
Why action is still worth it
Addressing climate risks will take effort and investment, but the cost of doing nothing is far higher.
Cleaner energy, stronger infrastructure, and smarter building practices can help communities stay safe and financially secure.
From installing solar panels to weatherproofing homes, people are already embracing solutions that reduce pollution and save money.
Join our free newsletter for good news and useful tips, and don't miss this cool list of easy ways to help yourself while helping the planet.
