The World Wide Fund for Nature (WWF), an international conservation organisation working on environmental protection and sustainable development, has published a new white paper titled “Tackling the Insurance Protection Gap: leveraging climate and nature to increase resilience”.
According to WWF, the paper warns that degrading ecosystems are increasing climate-related risks and contributing to rising uninsured losses across advanced economies.
WWF states that the analysis examines the relationship between climate change, nature loss and the global insurance protection gap, and is accompanied by a policy brief that translates the findings into recommendations for governments, financial regulators and insurers aimed at strengthening resilience and maintaining insurability.
WWF notes that while many widely cited assessments identify climate change as the main environmental factor behind rising insurance premiums and widening protection gaps, its analysis finds that nature loss is a frequently overlooked driver that significantly intensifies physical climate risks.
According to WWF, the organisation’s research shows that protecting and restoring ecosystems is one of the most effective ways to reduce these risks and improve resilience. WWF explains that degraded ecosystems are less able to function as natural buffers against extreme weather, creating a reinforcing cycle in which more frequent and severe events affect communities with diminishing capacity to withstand them.
The paper highlights that in areas with extensive deforestation, the risk of large-scale flooding can increase by as much as 700%. WWF reports that the associated economic and financial impacts of extreme weather events and long-term climate hazards are growing quickly, with global disaster-related losses estimated at US$2.3 trillion in 2023, including indirect and ecosystem-related costs.
According to WWF, the white paper considers insurability challenges beyond property insurance, showing how climate and nature-related risks are also contributing to losses across health, agriculture, liability, business interruption and infrastructure. WWF indicates that these impacts are linked to higher health costs, lower productivity, increased food prices and uninsured disruptions to supply chains.
WWF further reports that as insurers respond to rising risks by increasing premiums, restricting coverage or withdrawing from high-risk areas, a growing number of households and businesses are left without adequate protection. In the United States, WWF estimates that the insurance protection gap averaged US$64 billion per year between 2021 and 2024, while in the European Union it reached €59 billion per year between 2021 and 2023.
The analysis by WWF also finds that extreme weather events and expanding insurance protection gaps are increasingly affecting incomes, asset values, credit and mortgage markets, and public finances, creating broader risks for economic stability and social cohesion. WWF highlights that public budgets are especially exposed as governments face higher costs for emergency response and reconstruction, increased pressure on public insurance schemes and declining tax revenues, while damage to ecosystems remains underfunded and the costs of restoration largely fall on taxpayers.
WWF emphasises that the paper shows preventive action delivers significantly higher value than post-disaster assistance. The organisation points to evidence that in the United States, every dollar invested in climate resilience can save up to US$13, while in the United Kingdom each £1 spent on flood risk management avoids £8 in damages.
According to WWF, protecting and restoring ecosystems is among the most effective preventive approaches, as healthy forests, wetlands and mangroves reduce exposure to floods, storms and heat. WWF cites the example of the Alps, where protective forests provide benefits valued at around CHF 4 billion annually and can be up to 25 times more cost-effective than engineered alternatives.
Building on the findings of the white paper, WWF’s accompanying policy brief calls for a shift in how governments and financial regulators address the insurance protection gap, with climate mitigation, ecosystem restoration and insurance policy treated as equally important.
WWF argues that without addressing the underlying drivers of risk, measures to improve financial resilience will remain incomplete and leave communities exposed. According to WWF, its recommendations emphasise the need to properly value ecosystems and nature-based solutions in risk assessments, integrate ecosystems into adaptation and recovery planning, align insurance regulation with incentives for risk reduction, and accelerate efforts to reduce emissions and stop the loss of nature.
Kirsten Schuijt, Director General of WWF International, added: “The exponentially growing losses and damage from extreme weather events that are undermining the insurance market, are caused both by increasing temperature and the destruction of ecosystems that are protecting us. Forests, mangroves or wetlands are crucial for reducing the devastating impact of these extreme events and therefore need to be at heart of the strategies to increase our resilience and keep regions insurable.”
