Rising cost of insuring against climate crisis will have wider knock-on effects for UK economy | Heather Stewart

Anyone attempting to notch up a productive day’s work in the searing heat of southern England this last week was left in little doubt about the impact of extreme weather . But the economic effects of the climate crisis for the UK are not confined to the many hours lost to quietly perspiring – or fetching kids dismissed early from scorching classrooms. A pair of well-timed interventions from the finance lobby group TheCityUK and Swati Dhingra, the economist and independent member of the Bank of England’s monetary policy committee, made that point powerfully last week. As Andy Burnham races towards No 10 , both pointed to the need for a more active role for government in moderating the effects of the crisis in the years ahead. TheCityUK’s report, written with the insurer Marsh, focused on the mounting challenge of insuring homeowners and businesses against the costs of extreme weather events. With such events, including wildfires and floods, happening increasingly frequently and with growing severity, it argues that the risk of damage is becoming more difficult for insurers to price and warns of growing “protection gaps”. It said: “Traditional actuarial methods – the basis for insurance pricing – assume the underlying probability of loss is broadly stable year to year. …