Latest news with #GüntherThallinger
CNBC
08-08-2025
- Business
- CNBC
Why insurers worry the world could soon become uninsurable
Top insurers fear the climate crisis could soon outpace industry solutions, effectively threatening to make entire regions around the world uninsurable. Günther Thallinger, a board member at Allianz, one of the world's biggest insurers, recently outlined how the world is fast approaching temperature levels where insurers will no longer be able to offer cover for financial services, such as mortgages and investments. In a LinkedIn post published in late March, Thallinger made the case for rapid decarbonization, pointing out that entire asset classes were "degrading in real time" as extreme weather events take their toll. Perhaps most strikingly of all, he warned the worsening climate crisis appears to be on track to destroy capitalism. Insurance, which is regarded as the invisible lubricant of the global economy, has a unique role to play in addressing climate-related risks. As professional risk managers, insurers routinely allow investors to take on calculated risks, protecting individuals and businesses against financial losses. Thallinger, who is responsible for investment management and sustainability at Allianz, told CNBC that approximately two-thirds of economic losses from natural catastrophes are currently uninsured, indicating a "major societal problem." The so-called protection gap means that the financial burden of these disasters often falls on individuals, businesses and governments, rather than insurance firms. "If this volume just grows even more, we simply have a societal situation that is not bearable anymore because it is just too much risk that is no longer covered," Thallinger told CNBC by video call. "The logic is not ours or mine. No, absolutely not. There are many people who are actually talking about how you cannot insure certain assets. It's very, very difficult to deal with these assets as an investor." The warning comes at a time when the world is on course for a temperature increase of as much as 2.6-3.1 degrees Celsius this century, according to the United Nations, a level that would trigger "catastrophic" consequences for the planet. Scientists have repeatedly warned that global average temperatures must be kept below 1.5 degrees Celsius to avoid the worst of what the climate crisis has in store. This threshold is recognized as a crucial long-term target because so-called tipping points become more likely beyond this level. Tipping points can lead to dramatic shifts or potentially irreversible changes to some of Earth's largest systems. "We can really talk about adaptation. How to build our infrastructure, our houses, our streets, our pipelines, our grids in such a way that they can withstand certain forms of weather phenomena. This is something that we can do with a very, very easy economic case behind it," Thallinger said. Allianz estimates that the cost of economic losses from natural catastrophes is typically around 10 times higher than the cost of adaptation, noting that this provides a clear economic incentive for policymakers to invest in preventative measures. "If we continue, however, with the policies that we have out there, we are clearly on a pathway now of 2.7 degrees or 3 degrees where adaptation is simply not doable anymore. This is just what it is. We cannot protect Amsterdam from sea level rise of three meters. This is just not doable," Thallinger said. It's not just Allianz's Thallinger fearing the worst. Zurich Insurance Group, Europe's fifth-largest insurer, said in April alongside a research paper assessing climate resilience that the outlook looks "alarmingly bleak." The Swiss insurer cited the Los Angeles wildfires at the start of the year as a stark reminder that even the world's wealthiest economies are unprepared for the impact of increasing climate risks. Zurich also found that global insured losses have grown at a much faster rate than the global economy over the past three decades. On an inflation-adjusted basis, Zurich said that average insured losses rose by 5.9% per year between 1994 and 2023, while global gross domestic product (GDP) increased by 2.7% annually over the same period. The findings suggest that insured losses have more than doubled relative to global growth over the past 30 years. "If insured losses continue to grow at this rate, premiums for climate risk coverage will need to increase to reflect the additional risk," Zurich Insurance Group said in the paper. "This in turn, will affect the level of protection that individuals and businesses are willing and able to purchase, with potential consequences for the overall functioning of the market." For insurers and reinsurers, the increase in severity and frequency of extreme weather events has coincided with astronomical growth in the catastrophe bond market. First created in the 1990s, so-called CAT bonds refer to a type of financial instrument designed to raise money for insurers in the event of a natural disaster, such as a hurricane or earthquake. Swiss Re, a leading global reinsurer, said in a recent report that the CAT bond market has expanded by a whopping 75% since the end of 2020, noting that the trend that shows little sign of slowing down. For Allianz's Thallinger, however, the climate crisis threatens to push a long-standing relationship between more risk and more business for insurers to breaking point. At some stage, this could have implications for financial markets, he said. Steve Evans, owner and editor-in-chief at specialist data provider warned the insurance industry won't just keep bearing the brunt of economic losses from natural disasters. "Unless resilience is increased and protection is put in place, then the more disasters impact regions and the more expensive their insurance is going to get. And that could be a terrible spiral to be honest with you," Evans told CNBC by video call. "If the losses keep escalating, it just becomes uneconomic for insurers and reinsurers and even the capital markets. So, something has to be done to really bring together both resilience and protection." Not everyone is convinced the insurance industry will struggle to function amid rising global average temperatures. "Will the world become uninsurable? Well, I'm a bit hesitant on that," said Tobias Grimm, chief climate scientist at German reinsurance giant Munich Re. "It's all about the question of price. We have appetite still to offer — not cut — insurance given that there are healthy market conditions, and we get risk adequate premium on that." Grimm told CNBC that since Munich Re's business offers reinsurance on a one-year basis, rather than a multi-year basis, the question of insurability is not typically something that comes up. "The underlying problem is that we still develop properties in high-risk areas, and we have seen with the example of Californian wildfires where many of these rich villas in the outskirts of the Los Angeles suburbs were hit first," Grimm said. "So, that's the issue. We can counter them by encouraging loss prevention and thinking about land use management schemes, these kinds of things," he added.
Yahoo
23-05-2025
- Business
- Yahoo
Industry expert issues urgent warning about economic impact of looming disaster: 'Threatens the very foundation of the financial sector'
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. 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. 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. 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%. Do you think America has a plastic waste problem? Definitely Only in some areas Not really I'm not sure Click your choice to see results and speak your mind. 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. 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-04-2025
- Business
- Yahoo
Letters to the Editor: A possible answer to California's FAIR Plan woes
To the editor: The problem with the FAIR Plan for fire insurance is that the risk pool isn't large enough ('Insurer of last resort kept growing. Then L.A. fire victims paid the price,' April 23). The California Legislature could address the issues by limiting the sale of fire insurance to only the FAIR Plan. Property owners could be free to purchase related insurance to their current, shareholder-dictated companies. This way, the risk for loss from fire would be spread among all property owners and not just those in high-risk areas, especially as high-risk areas seem to now be spread throughout the state. Joseph Haythorn, Los Angeles .. To the editor: The problems facing our insurance companies and the state FAIR Plan have been predicted as a result of our inattention to climate change. Günther Thallinger, who's on the advisory board of one of the world's biggest insurance companies, Allianz SE, warned that climate change if left unchecked would wreak havoc on the world's economic systems. He predicts that as environmental catastrophes continue to rise, insurance companies would no longer be able to offer insurance on homes and other infrastructure, and governments would not be able to bridge the differences. Without insurance, mortgage companies could no longer offer mortgages and without those, our banking industry would collapse. We are already seeing the beginnings of his prediction with insurance companies pulling out of much of California and the state plan having difficulty covering its costs. If this is not a call for drastic action on our part as citizens, then I am not sure what it would take. We need to make sure our government acts now in confronting the climate crisis. Karl Reitz, San Clemente This story originally appeared in Los Angeles Times.
Los Angeles Times
28-04-2025
- Business
- Los Angeles Times
Letters to the Editor: A possible answer to California's FAIR Plan woes
To the editor: The problem with the FAIR Plan for fire insurance is that the risk pool isn't large enough ('Insurer of last resort kept growing. Then L.A. fire victims paid the price,' April 23). The California Legislature could address the issues by limiting the sale of fire insurance to only the FAIR Plan. Property owners could be free to purchase related insurance to their current, shareholder-dictated companies. This way, the risk for loss from fire would be spread among all property owners and not just those in high-risk areas, especially as high-risk areas seem to now be spread throughout the state. Joseph Haythorn, Los Angeles .. To the editor: The problems facing our insurance companies and the state FAIR Plan have been predicted as a result of our inattention to climate change. Günther Thallinger, who's on the advisory board of one of the world's biggest insurance companies, Allianz SE, warned that climate change if left unchecked would wreak havoc on the world's economic systems. He predicts that as environmental catastrophes continue to rise, insurance companies would no longer be able to offer insurance on homes and other infrastructure, and governments would not be able to bridge the differences. Without insurance, mortgage companies could no longer offer mortgages and without those, our banking industry would collapse. We are already seeing the beginnings of his prediction with insurance companies pulling out of much of California and the state plan having difficulty covering its costs. If this is not a call for drastic action on our part as citizens, then I am not sure what it would take. We need to make sure our government acts now in confronting the climate crisis. Karl Reitz, San Clemente
Scoop
23-04-2025
- Business
- Scoop
Opening Ministers' Eyes To What They Refuse To See
Press Release – Nelson Tasman Climate Forum Halfway through what is known as the critical decade for climate action, the Forum is more resolved than ever, and even dares to believe New Zealand could be a role model on climate of the sort that the world desperately needs. Spurred by further sobering scientific reports and compelling economic warnings, and by ongoing silence from Cabinet, the Nelson Tasman Climate Forum is vigorously continuing its campaign to galvanise appropriate responses from Government. Halfway through what is known as the 'critical decade' for climate action, the Forum is more resolved than ever, and even dares to believe New Zealand could be a role model on climate of the sort that the world desperately needs. At Stuff has added important momentum to the discussion, but the Forum knows the journey to properly address such major issues is long and is far from over. Major insurers like giant Allianz Group are sounding stark alarms about the entire future of a market economy. In a compelling article, reported Allianz director Günther Thallinger on market impacts if the world fails to slash its emissions. 'The economic value of entire regions…will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate-driven market failure looks like.' And ' That means no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.' The forum has written yet again to try to engage the Prime Minister and Minister Watts in these critical issues, but to no avail. For more about the history and documentation of the campaign so far, refer to the Resilienz website here: In this dire context, it is calling on Government to Display the visionary leadership that is crucial to establishing and sustaining responses that are truly commensurate with such an existential threat. Give top priority to gaining deep understanding of the situation underpinning such stark warnings and to acting on that with decisiveness and utmost resolve. Take urgent steps to keep the New Zealand public and all sectors of the economy up to speed on what we must expect to deal with on climate change. Commit to and develop model climate-related strategies that set an example to the world, and make New Zealanders proud to be digging deep and exercising their highest possible ambition in such a globally critical arena. Take a truly wide-boundary view of the long-term economics of climate change.
