by Daniel Breouse & Sidd Mukherjedd
November 26, 2025
As extreme weather accelerates, humanity is nearing a tipping point where insurance -- and the economic system built upon it -- may no longer function. One of the world's largest insurers, Allianz SE, has issued an unusually blunt warning: the climate crisis is destabilizing global capitalism from within, and the breakdown has already begun.
Allianz board member Gunther Thallinger, who also chairs the company's investment board, argues that rising temperatures and worsening climate disasters are pushing many risks past the limits of insurability. And when insurance fails, everything built on top of it -- mortgages, real estate markets, infrastructure investment, business lending, and even municipal budgets -- begins to unravel.
His message is simple and grim:
"Heat and water destroy capital."
Flooded homes lose value. Overheated cities become uninhabitable. Billion-dollar infrastructure corrodes, warps, or burns. Entire asset classes are degrading in real time.
The consequences ripple far beyond insurance claims. They threaten the foundational assumptions of modern capitalism itself.
The planet is currently on track for 2.2°C to 3.4°C of warming -- well beyond the thresholds that insurers, governments, and markets are designed to withstand. Global temperatures have already surpassed 1.5°C and are projected to blow past 3°C within a decade.
At that level of heating:
The numbers already paint the picture of an economy under siege:
Insurers like Zurich now openly state that achieving net-zero emissions by 2050 is essential to prevent systemic collapse.
Thallinger's warning:
We may not have until 2050.
In California, major carriers have already stopped writing home insurance in fire-prone regions. In Florida, companies are fleeing as storm intensities shred actuarial models. These are not hypotheticals -- they are the first cracks in the global financial foundation.
Insurance only works when the risks are measurable and the premiums remain affordable. Climate change destroys both conditions.
Thallinger is explicit:
"As temperatures rise to 1.5°C, 2°C, 3°C, insurers will no longer be able to offer coverage. The premiums required exceed what people or companies can pay. This is already happening."
If insurance fails:
This is the hidden climate tipping point -- a systemic failure that happens quietly, through spreadsheets and canceled policies, before it erupts into a full-blown economic crisis.
Klaus-Peter Röhler, another Allianz board member, outlines what is required to keep insurance viable:
Climate-resilient building codes, flood defenses, and infrastructure upgrades.
Europe has completed only 5% of its planned flood protection projects.
At the current pace, it will take 100 years to finish.
Political pressure often forces insurers to keep premiums artificially low -- a recipe for insolvency. Without prices that reflect real risk, insurers collapse sooner.
Governments should backstop only the rarest, most catastrophic disasters -- not routine damage that should be prevented through better planning.
No country has successfully implemented this triad.
Some, notably the United States, demonstrate what happens when policymakers block these measures:
The lesson is clear: Insurability is not guaranteed.
It must be preserved -- and it is being lost region by region.
Allianz emphasizes that policyholders, governments, and insurers all have roles to play -- but adaptation can only delay collapse if emissions continue rising.
Without rapid decarbonization:
We are approaching a world in which the question will not be whether people can afford insurance -- but whether insurance can afford people.
Climate change is often framed as a humanitarian crisis or an environmental challenge. It is far more than that.
It is a capital destruction engine operating on a planetary scale.
Insurance is simply the first part of the system to falter, because it is the first to directly feel the mathematical impossibility of infinite losses on a finite balance sheet. But what follows is not limited to insurers:
Unless warming is rapidly halted, we will cross a line where risk can no longer be transferred, financed, or recovered.
That is the collapse point.
* Our probabilistic, ensemble-based climate model -- which incorporates complex socio-economic and ecological feedback loops within a dynamic, nonlinear system -- projects that global temperatures are becoming unsustainable this century. This far exceeds earlier estimates of a 4°C rise over the next thousand years, highlighting a dramatic acceleration in global warming. We are now entering a phase of compound, cascading collapse, where climate, ecological, and societal systems destabilize through interlinked, self-reinforcing feedback loops.
What Can I Do?
The single most important action you can take to help address the climate crisis is simple: stop burning fossil fuels.