Bridging climate change and health risks

Climate change is no longer a distant threat; it is a lived reality, reshaping our environment, health systems, and daily life fabric. The consequences are far-reaching, from record-breaking temperatures to shifting disease patterns and more frequent natural disasters. As these challenges mount, the insurance and reinsurance sectors are emerging as crucial players—not just in mitigating economic losses, but in building long-term societal resilience against the multiplying effects of climate instability.

In recent years, the world has witnessed an unsettling rise in climate-sensitive health conditions. Extreme heat has intensified cardiovascular and respiratory illnesses, while erratic rainfall and floods have led to outbreaks of waterborne diseases. Vector-borne illnesses like malaria, dengue, and chikungunya are now expanding into regions previously unaffected, fueled by warmer climates and longer breeding seasons for mosquitoes. India offers a clear snapshot of this new reality. In 2023, several Indian states recorded temperatures above 45°C, triggering heatwaves that strained emergency services and increased hospital admissions.

According to the World Health Organisation, between 2030 and 2050, climate change is expected to cause approximately 250,000 additional deaths per year due to malnutrition, malaria, diarrhoea, and heat stress. Recent years have seen an alarming rise in climate-linked illnesses, from deadly heatwaves in Delhi to leptospirosis outbreaks in flood-affected Mumbai. Simultaneously, extreme weather events such as Cyclone Amphan (2020) and the Uttarakhand flash floods (2021) have devastated infrastructure and overwhelmed local health systems. The COVID-19 pandemic served as a stark reminder of how deeply interconnected global risks are.

The health crisis evolved into an economic one, triggering massive business interruption claims and overwhelming life and health insurance portfolios. It also exposed critical gaps in coverage and modelling, prompting the reinsurance industry to step up with new strategies for risk sharing. The January 2025 California wildfires devastated thousands of homes, pushed air quality to hazardous levels, and caused billions in insured losses. In 2024, global insured losses from natural catastrophes hit US$ 140 billion, making it the third-highest year on record, according to Munich Re. These events are no longer “once in a generation”—they’re happening every year. These events highlight the dual burden of climate change: a direct threat to life and an indirect catalyst for wider health risks.

This shifting landscape is compelling the healthcare and pharma industries, and in turn, the insurance sector to adapt and reinvent. As the pace and intensity of climate-related risks accelerate, the traditional model of insurance is being fundamentally reimagined. Today, the insurance must shift from a model of compensation to one of prediction, prevention, and preparedness. Public health planning must now account for climate-linked epidemiological changes, and drug developers are being pushed to anticipate and respond to emerging disease profiles. Pharma R&D is also being reshaped.

In this context, risk mitigation is becoming just as important as treatment. This is where the insurance sector, though less visible, plays a supporting but critical role. Health and life insurers are increasingly factoring in climate-related vulnerabilities into underwriting and policy design, while reinsurance players help absorb large-scale shocks from pandemics or disasters. Products like climate-linked microinsurance and parametric insurance—where payouts are triggered by environmental conditions like extreme heat or rainfall—are being explored to protect vulnerable populations, particularly in lower-income and rural regions.

Reinsurance arrangements like quota share and retrocession, coupled with Insurance-Linked Securities (ILS) such as catastrophe and longevity bonds, effectively distribute the financial impact of risk, contributing to greater financial resilience within the insurance ecosystem. Collaborations between government agencies, private insurance companies, and NGOs can lead to the development of affordable insurance products with shared risk. Governments can provide regulatory support and potentially some financial backing, while private insurers bring their expertise in product design and risk management. NGOS and public health bodies, especially in countries like India, play a vital role in bridging last-mile delivery and awareness gaps, especially among communities most affected by climate-linked diseases.

Ultimately, climate change is altering the very foundations of global health. It is demanding not only new medicines and treatment strategies, but also rethinking how health systems are built, protected, and financed. As the boundaries between environment, health, and infrastructure continue to blur, it is clear that adaptation must be comprehensive. This is no longer about treating symptoms, it’s about preparing for a new normal.