Without Insurance, Capitalism As We Know It Will Be Impossible

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Insurance is the lubricant that keeps the gears of commerce turning. Without it, the capitalist system we all know and love grinds to a halt. If you want to drill for oil in Alaska, build a factory in Antwerp, mine aluminum in Finland, or erect a skyscraper in Kuala Lumpur, you need insurance. If you want a mortgage, you need insurance.

Günther Thallinger is a member of the board of directors for Allianz, one of the world’s biggest insurance companies. In a LinkedIn post entitled “Climate, Risk, Insurance: The Future of Capitalism” published on March 25, 2025, he wrote,

“CO₂ emissions directly increase the amount of energy trapped in the Earth’s atmosphere. This is not a vague or future issue — it is physical reality. The more emissions, the more energy retained. The more energy, the more extremely the atmosphere behaves. Storms intensify. Heatwaves last longer. Rain falls harder. Droughts cut deeper. This is the first principle. These extreme weather phenomena drive direct physical risks to all categories of human owned assets — land, houses, roads, power lines, railways, ports, and factories. Heat and water destroy capital. Flooded homes lose value. Overheated cities become uninhabitable. Entire asset classes are degrading in real time, which translates to loss of value, business interruption, and market devaluation on a systemic level.”

What a succinct, adult statement! It gives the lie to the infantile drivel coming from MAGAlomaniacs and the current ignoramus masquerading as the president of the United States who dismisses any calls for climate action as part of a “green new scam.” Thallinger added that the world is fast approaching temperatures where insurers will no longer be able to offer coverage for many climate risks. The damage at 3º C will be so great that governments will be unable to provide financial bailouts and it will be impossible to adapt to many climate impacts, he said.

No Insurance, No Capitalism

Without insurance, many financial services are no longer commercially viable, from mortgages to investments. “The insurance industry has historically managed these risks. But we are fast approaching temperature levels … where insurers will no longer be able to offer coverage for many of these risks.” The math breaks down — the premiums required exceed what people or companies can pay. This is already happening. Entire regions are becoming uninsurable.

In the US, State Farm spends millions of dollars a year on ads claiming, “Like a good neighbor, State Farm is there.” But in fact the company is not there for millions of Americans who live where the risk of hurricanes, flooding, or forest fires is too high for the company’s risk analysts. If you think about parts of the US that have suffered such natural disasters lately, you will realize that it is not just wine swilling liberals in California who are affected, it is the people in Asheville, North Carolina, and Montpelier, Vermont, who can’t repair their flood-damaged homes because they need a loan first but no one will lend then the money because they are unable to get insurance.

It’s a giant Catch-22 and there seems to be few signs that things are going to get any better any time soon. To make the insanity of the tight bond between insurance companies, global heating, and fossil fuels, clearer, all you need to know is that State Farm is a major investor in the fossil fuel industry. If you think denying coverage because of climate change while promoting activities that makes global heating more acute sounds like a giant scam, you are not alone.

According to The Guardian, another global insurer, Aviva, said recently that extreme weather damages from 2013 to 2023 totaled $2 trillion, while GallagherRE said the figure was $400 billion in 2024. Zurich Insurance said it is “essential” for the global economy to reach net zero by 2050. “The good news is we already have the technologies to switch from fossil combustion to zero emissions energy. The only thing missing is speed and scale. This is about saving the conditions under which markets, finance, and civilization itself can continue to operate,” Thallinger said.

Nick Robins, the chair of the Just Transition Finance Lab at the London School of Economics, told The Guardian, “This devastating analysis from a global insurance leader sets out not just the financial but also the civilizational threat posed by climate change. It needs to be the basis for renewed action, particularly in the countries of the global south.” Janos Pasztor, former UN assistant secretary-general for climate change added, “The insurance sector is a canary in the coal mine when it comes to climate impacts.”

A Systemic Risk

Thallinger said this all adds up to a systemic risk “threatening the very foundation of the financial sector” because a lack of insurance means other financial services become unavailable. “This is a climate induced credit crunch. This applies not only to housing, but to infrastructure, transportation, agriculture, and industry. The economic value of entire regions — coastal, arid, wildfire-prone — will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate driven market failure looks like.”

No governments will realistically be able to cover the damage when multiple high-cost events happen in rapid succession, as climate models predict, Thallinger said. Australia’s disaster recovery spending has already increased seven-fold between 2017 and 2023, he noted. The idea that billions of people can just adapt to worsening climate impacts is a “false comfort,” he said. “There is no way to ‘adapt’ to temperatures beyond human tolerance. … Whole cities built on flood plains cannot simply pick up and move uphill.”

At 3°C of global heating, climate damage cannot be insured against, covered by governments, or adapted to. “That means no more mortgages, no new real estate development, no long term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.” Does Thallinger have your attention yet?

The only solution, he suggests, is to stop burning fossil fuels or capture the emissions. Everything else is either a delaying tactic or a distraction. He said capitalism must solve the crisis, starting with putting its sustainability goals on the same level as financial goals.

CleanTechnica readers know that means ending the silly game where the harm caused by burning fossil fuels is assigned no financial cost. Instead, it becomes what economists blithely refer to as an “untaxed externality,” which is a polite way of saying capitalist have for centuries been foisting those costs off onto society in general while keeping all the profits for themselves. It’s looting, pure and simple, and it exists because the people who benefit the most are able to use their profits to buy compliant politicians who make threatening noises about an “energy emergency” to protect those profits.

Thallinger said in February, “The cost of inaction is higher than the cost of transformation and adaptation. If we succeed in our transition, we will enjoy a more efficient, competitive economy [and] a higher quality of life.” Now all we need to do is convince the people who are cheering America’s new ayatollah that they are being ripped off by their leader and his henchmen. What is happening in the US is akin to a criminal conspiracy. How long will people put up with getting the short end of the stick over and over and over again?