Insuring Against Extreme Heat Navigating Risks in a Warming World 2025

Worker health and the associated labour productivity loss are among the most critical drivers of economic impacts from extreme heat. A 2021 study identified that in the US alone, more than 2.5 billion hours of labour were lost due to heat in the agriculture, construction and manufacturing sectors. This cost the economy about $100 billion, a figure projected to grow to $500 billion per year by 2050, with disproportionate impacts in economies in the Global South.21 By 2050, heat stress is projected to fuel 2.2% loss in total working hours, representing economic losses of $7.1 trillion due to loss in labour productivity.22 Employers, business leaders and policy-makers are actively developing strategies to protect worker health and productivity amid more prolonged periods of extreme heat. While extreme heat is beginning to rise to the top of the industry agenda, it still receives less attention than more visible and immediate climate risks such as hurricanes and floods. Extreme heat – often referred to as the “silent killer” – has uniquely diffuse and long-term impacts, which present a particularly complex challenge for the insurance industry and for economies and societies more broadly. The effects of heat can take days to escalate and are addressed through an extensive set of short- and long-term mitigation measures. Individuals will also be affected by extreme heat differently depending on age, gender and medical history, making it difficult for insurers to define universal triggers to inform their policies. Despite these challenges, today’s risk landscape presents opportunities for business leaders to proactively build climate resilience into business models, products, workforces and investments. As extreme weather events such as heatwaves and wildfires become more frequent and intense, companies and governments are creating innovative mechanisms for financing and transferring risk in non-traditional ways.Vulnerable workers are at the front lines of the extreme heat risk landscape FIGURE 3 of the working population 22.85 million non-fatal injuries18,970 deaths annually Regions with the highest workforce exposure to excessive heat: Africa 92.9% of the workforce The Arab States 83.6% of the workforce Region with the most rapidly increasing workforce exposure to excessive heat since 2000:GLOBALLY THIS RESULTS IN 2.41 billion workers70% are exposed to excessive heat AND Europe and Central Asia 17.3% increase17.3%92.9% 83.6% Source: International Labour Organization (ILO). Insuring Against Extreme Heat: Navigating Risks in a Warming World 8