Call to action for the insurance industry and public sector 4 Insurers and policy-makers have the capacity, risk exposure and societal obligation to tackle the challenges posed by extreme heat. Insurance industry The insurance industry is at the forefront of the rapidly evolving extreme heat risk landscape. While the insurance industry is not responsible for creating growing climate risks, the industry can – and should – act with urgency, leading the development of innovative strategies to mitigate heat risk and help economies and societies adapt to this evolving threat. Insurance leaders must seize this moment to prioritize heat risk in their strategic planning, invest in forward-thinking solutions and collaborate with public and private sectors to build a more resilient future for vulnerable communities and industries. As large asset owners, once appropriate funds are stored to pay claims, insurers can use their capital to drive forward high-impact resilience and adaptation interventions. Leaders working at the intersection of insurance and climate resilience must consider how to adapt their products and risk-sharing mechanisms to extreme heat. For example, insurance products and partnerships applied to flood risk in the past could be adapted to extreme heat. Mobilizing financial capital for flood resilience, building strategic protection in infrastructure and using innovative financial mechanisms – such as resilience bonds – have helped manage flood risk in the past and could be retrofitted to address extreme heat.65 Insurance partnerships for flood resilience, such as the National Flood Insurance Program’s (NFIP) community rating programme – which offers reduced premiums to communities that invest in flood mitigation – could be adapted for communities with certified heat action plans. Insurers could provide rebates or premium discounts for investments that improve resilience to extreme heat. Coastal resilience risk transfer mechanisms, such as parametric insurance for coral reef protection, demonstrated that the long-term risk reduction benefits vastly outweighed the costs of premium reductions offered by the insurance industry. Similar structures could be applied to an insurance-based extreme heat resilience framework.66 20 Insuring Against Extreme Heat: Navigating Risks in a Warming World

Insuring Against Extreme Heat Navigating Risks in a Warming World 2025