Insuring Against Extreme Heat Navigating Risks in a Warming World 2025

Early warning systems for extreme weather events save lives and will be a key tool to manage the impact of extreme heat in the future. Early warning systems have helped reduce the number of people killed by natural disasters by 76% since the 1970s.48 However, as with many of the effective solutions for climate change, early warning systems are not equally available across climate-risk-prone communities and economies. Insurers can use their superior climate risk data collection to help strengthen early warning systems and proactively identify potential threats and trigger alerts. Climate risk data derived from early warning systems allows government, insurers and policy- makers to take pre-emptive action, such as sending out alerts to policyholders and informing disaster response teams. Early warning systems and parametric insurance products can work together effectively for disaster risk management. Early warning systems gather data from weather stations and satellites, while parametric insurance provides immediate payouts based on predefined triggers. For example, low rainfall levels provide early warning of an impending drought and parametric products can offer coverage for losses that are difficult to model. ARC uses Africa RiskView – a satellite-based system – to monitor weather patterns and trigger payouts when a parametric index is exceeded.49 In the UK, the Heat Health Service issues forecasts for high temperatures and a tiered alert system with five levels, ranging from level 0, which focuses on long-term planning, to level 4, indicating an emergency response. Depending on the alert level, this system mobilizes public health resources and emergency responders, and provides guidance for business leaders to protect workers amid hazardous heat conditions. France took perhaps the most proactive response in Europe after a 2003 heatwave killed 15,000 citizens in a fortnight, establishing the Vigilance heat and health early warning system with a tiered alert structure to protect vulnerable residents from heatwaves. Investments in early warning systems have been recognized as a key priority for national adaptation programmes. The United Nations estimates that over the next five years, $3.1 billion will be necessary to strengthen early warning systems, particularly in the Global South. This will strengthen disaster risk knowledge and management while bolstering observation in forecasting and communications infrastructure and enhance preparedness and response capabilities.50 A recent study from the World Meteorological Organization projected that scaling up heat health warning systems in 57 countries alone would save almost 100,000 lives per year.513.3 Early warning systems The United Nations estimates that over the next five years, $3.1 billion will be necessary to strengthen early warning systems, particularly in the Global South. As communities unaccustomed to extreme heat face consistently higher-for-longer temperatures, communities, cities and nations are creating heat action plans. A heat action plan is designed to mitigate the social, economic and health impact of extreme heatwaves. This typically includes a set of coordinated actions to be taken by various organizations, including public health departments, emergency management agencies and community groups. It also involves a local heat vulnerability index with multiple trigger points at different daytime and overnight temperatures, as well as the duration of multi-day extreme heat events Based on these pre- defined triggers, communities roll out key services (primarily aimed at vulnerable residents), including cooling centre activation, community outreach and emergency response protocols. Successful heat action plans typically bring together stakeholders working in isolation, especially from areas such as infrastructure and the built environment, insurance, public health, workforce safety, emergency planning and response, and data.52 Sydney’s Heat Action Plan for 2025-2030 aims to ensure people living in Greater Sydney can survive and thrive in a warming climate and during acute extreme heat events. The Greater Sydney Heat Taskforce convened key organizations across health, urban planning and design, infrastructure, emergency management, and the private sector to collaboratively design the plan, which is guided by six key directions to enhance extreme heat resilience: 1. Heat-smart decisions: Collaboration, shared understanding and monitoring of heat risk improves heat risk decision-making for Greater Sydney. 2. Heat-smart places for people: Homes and buildings are heat-responsive and can keep people safe from heat, while heat mitigation and adaptation are required in state and local planning controls. 3. Heat-smart economies: The private sector plans for heat, supports risk reduction, minimizes the economic impacts of heat and seeks commercial opportunities in adaptation.3.4 Heat action plans Insuring Against Extreme Heat: Navigating Risks in a Warming World 17