Is mandatory climate insurance a good idea?

THE ANSWER: We first proposed the concept 4 years ago. Italy is now putting it into practice.* But unless it is designed in the right way, it is destined to fail.

The insurance protection gap in the context of the accelerating climate crisis is now an existential risk to businesses. When we published the report “Corporate Rainy Day Funds” four years ago, we set out to map a suite of policy recommendations that could avoid the scale of bailouts seen during the pandemic AND avoid future ‘climate bailouts’ that seem inevitably on the rise.Over the past years, we have engaged regulators, insurance companies, and industry experts on our ideas. Mandatory climate insurance in particular sparked significant debate as to the obvious advantages but also emerging challenges. As Italy pioneers its policy from next year, our latest “Make or Break” report lays out a set of challenges and recommendations to make mandatory climate insurance work.

Read our “make or break” report on mandatory climate insurance and how to make it work here.

As always, our Make or Break series represents ideas designed to start a conversation, not end them. We hope they sometimes change other people’s minds and sometimes spurs responses that change ours. Whether you agree, disagree, or think we miss the point, we’d love to hear from you!

*We do not seek to take specific credit for this policy measure. However, given that our research was among the first, if not the first, to lay out the case for mandatory corporate rainy day funds and insurance in the face of growing climate risks, we are excited to see the opportunity for policy entrepreneurship.