Insuring Against Extreme Heat Navigating Risks in a Warming World 2025

Global companies are facing heat-related business disruptions that threaten the delivery of their core products and services. In 2023, drought intensified by extreme heat in the Panama Canal caused water levels to drop, prompting canal authorities to limit traffic. In December of 2023, only 22 ships per day could pass through the canal, down from the usual 38. More than 160 ships were stuck at anchor at both ends. This 36% reduction in ship crossings cost global shipping companies roughly $700 million. Other drought-fuelled shipping disruptions in the Rhine, the Suez Canal and other key waterways have caused significant economic impacts in recent years.11 Lower water levels also compounded technological and safety risks including the integrity of the energy infrastructure system in Europe, notably causing up to 50% reductions in hydro and nuclear power in certain countries, all at a time when energy supply has been significantly disrupted by the impacts of the Russian invasion of Ukraine. Higher temperatures are straining physical infrastructure that was designed for a climate that no longer exists. For example, after historic heatwaves in Europe in 2022, record-breaking temperatures in London caused train service delays amid fears of buckling tracks, diverted flights after runways melted and set off dozens of fires, such that the London Fire Brigade saw its busiest week since World War II.12 In the capital, the cast-iron chains and sculptures of Hammersmith Bridge were wrapped in foil to repel heat after cracks in the iron began to widen, raising fears that the 19th-century bridge could collapse.13 Europe is warming faster than any other continent, and the race to adapt infrastructure and people to a hotter-for-longer climate is accelerating. Beyond physical assets, the human health effects of extreme heat can be catastrophic. Extreme heat exacerbates respiratory, pulmonary, kidney and cardiovascular disease, especially for vulnerable populations, including the elderly, children, outdoor workers, homeless people and people with pre-existing conditions.14 Some of the physical consequences of heat, such as heat stroke and Alarming numbers of extreme heat records were broken in 2024 FIGURE 1 Global average temperature July 2024 global surface temperature ranked warmest since global records began in 1850, making it the 14th consecutive record-warm month. North America North America had its second-warmest July and second-warmest January-July on record. Caribbean The Caribbean region and the Main Development Region for Atlantic hurricanes each had their warmest January-July on record. South America South America had its warmest January-July on record. Patagonia Extreme cold temperatures caused wildlife deaths in southern South America.Europe Europe had its warmest July and warmest January-July on record. Hurricane Beryl Following a destructive landfall in Grenada in June. Beryl peaked in July as the earliest category 5 hurricane on record. Beryl also made landfall on the Yucatan Peninsula and Southeast Texas. Africa Africa had its warmest July and warmest January-July on record. Ethiopia Heavy rain in remote areas of southwestern Ethiopia led to landslides that killed more than 200 people and destroyed crops and homes.Mediterranean A series of heatwaves in several Mediterranean countries brought widespread temperature exceedances of 100°F and hundreds of deaths that were likely related to heat. Greece had its warmest July on record. Persian Gulf Heat indices in parts of the Persian Gulf region reached extreme levels in July as temperatures exceeding 105°F and Gulf water temperatures above 90°F led to feels-like temperatures of 140°F or higher.Tropical Storm Prapiroon Severe Tropical Storm Prapiroon caused floods and landslides that led to extensive damage in southern China and northern Viet Nam. Asia Asia had its warmest July and fourth warmest January-July on record. Phillippines Heavy rains associated with the southwest monsoon and Typhoon Gaemi triggered widespread flash floods, where more than 30 deaths were reported. Oceania Oceania had its eighth-warmest January-July on record.Typhoon Gaemi Gaemi, a category 4 equivalent typhoon, caused significant flooding and wind damage in Taiwan, China and China.The Arctic The Arctic had its third-warmest July and fifth-warmest January-July. Arctic sea ice extent for July was sixth lowest on record. Antarctic sea ice extent The Antarctic tied as fifth-warmest July and sea ice extent for July ranked second lowest on record.Global Global ocean surface temperature was second warmest for July, ending a streak of 15 consecutive monthly record highs. Source: National Centers for Environmental Information. reduction in ship crossings cost global shipping companies roughly $700 million.36% Insuring Against Extreme Heat: Navigating Risks in a Warming World 6