The leading indicator: what the insurance market reveals about climate transition-plan credibility 

What you need to know

• Insurance market signals are a leading indicator of climate transition plan credibility. When insurers reprice, narrow coverage, or withdraw capacity from a sector, they are making priced risk statements about future insurability that typically arrive before a company's own reporting reflects the same conclusion.
• Insurability is already impacting asset values. 2025 was a below-average hazard year that still produced above-average insured losses. Reclassification of return periods¹ for severe weather events are inputs to a transition plan's financial information. Transition plans built on outdated return-period assumptions overstate the resilience of the assets and operations they describe.
• Investors are now explicitly connecting insurance affordability and availability to investment decisions. Ashurst Perkins Coie and Radley Yeldar's report on credible transition plans² confirms that investors want to see how physical climate risks - including insurance costs and business interruption - are being managed.

What you need to do

• A credible transition plan should disclose material insurability changes as a managed dependency. However, most transition plans do not yet address insurability at this level of resolution. This presents an opportunity for companies that close this gap.

The signal that arrives first

When an insurer narrows its appetite for a sector, attaches a new exclusion to its policies, materially reprices a line, or withdraws capacity altogether, it is making a statement about the future insurability of an activity. That statement is priced risk, not opinion, and it tends to arrive before the same conclusion is visible in a company's own reporting cycle. For an investor or a lender assessing a corporate climate transition plan, insurability is one of the cleanest external tests available of whether the assumptions in that plan will survive contact with the market.

This article is not about promoting the role of insurance. It describes what the investor community says it wants. The Sustainable Markets Initiative's recent work³ with Impax Asset Management and Marsh concludes that insurance affordability and availability need to be built into investment decisions far more explicitly given their financial materiality, and that modelled climate data should be triangulated against real-world evidence - including insurance-market behaviour and the indirect effects of past events. The report also sets out what investors probe during company engagement, including the implications of changing insurance cost and availability alongside supply-chain exposure and adaptation measures.

So the premise of this article is straightforward: a transition plan becomes more credible, and more useful to the people who allocate capital to corporate borrowers, when its assumptions can be reconciled with the signals the insurance market is already pricing.

The signal is moving now

The evidence that insurability signals are repricing is in the loss record, not in forecasts. Aon's 2026 Climate and Catastrophe Insight⁴ reports that 2025 produced insured losses around a quarter above the long-run average even though economic losses ran well below it - a below-average hazard year that still produced an above-average insurance bill. Swiss Re's sigma 1/2026⁵ records secondary perils - wildfire, severe convective storm, flood - accounting for the large majority of global insured natural-catastrophe losses for the year. It found that a substantial share - around 60% - of the growth in wildfire loss in North America reflects hazard intensification rather than simply more exposure. Return period assumptions are moving with the data: Swiss Re now assesses the recurrence of a European hailstorm on the scale of 2014's Storm Ela at well under ten years, against the twenty-to-fifty-year return period framing the market had priced⁶ .For a company, that is not a meteorological footnote. A return period is an input to a transition plan's financials - the expected cost of an asset, the assumed frequency of business interruption, the headroom in a resilience budget. Where the market has reclassified an event from once-in-a-generation to once-in-a-decade, a transition plan still built on the older figure is overstating the resilience of everything that rests on it.

A note of precision matters here, and it strengthens rather than weakens the argument: headline natural catastrophe totals include geophysical perils such as earthquake and volcanic activity, which are not climate-driven. The trend a transition plan needs to read is the weather-related subset - and it is within that subset that the growth in losses is concentrated.

For a company, the consequence is not a catastrophe statistic; it is insurability, price and capacity. The effect is already visible at the level of individual firms: the SMI–Impax–Marsh work cites Hurricane Helene's 2024 landfall forcing the medical-technology company Baxter International to close a critical facility temporarily, at a pre-tax cost of around US$110 million. However, the disruption to Baxter's supply of intravenous-solutions softened demand even after the plant reopened. The damage in this case was physical, not a pricing decision - but an event of that kind can reset an asset's insurability going forward. The cost and availability of cover for that site becomes a live question and answering it before the next severe weather event is exactly what a credible transition plan is for.

An asset whose insurance terms change materially is, in economic substance, an asset that has been repriced. This is so even where that repricing has not yet flowed through into carrying values, impairment tests or the financial statements. The transition plan may be the earliest, and cheapest, place to be clear about that repricing noting that transition plans are updated typically every three to five years or on a material corporate change. In the interim, insurability can be highlighted as a live dependency in the current strategic cycle, so that a subsequent reset is registered against the existing financial position.

What investors now look for - and where insurance sharpens the message

Ashurst Perkins Coie and Radley Yeldar's report on what investors look for in climate transition plans sets out nine attributes of a credible plan. Read through an insurance lens, several of them gain a sharper, more testable edge.

The first cluster of these attributes is about substance over ambition: showing the mechanics of the transition, detailing the financials behind it, and showcasing the returns it protects or creates. Investors referenced in that report rated interim milestones as extremely important by a margin of more than two to one and were blunt that a plan that is silent on funding invites the market to draw its own conclusions - "If capital isn't moving, neither is the transition," as one contributor put it.

The insurance lens makes this concrete. Investors said explicitly that they want to see how physical climate risks, including insurance costs and business interruption, are being managed - so insurability is not a footnote to the financial case for adaptation, it is part of it. And the returns are measurable: the SMI–Impax–Marsh evidence records homes built to a recognised resilience standard achieving loss-ratio reductions of 55 - 72%. This means insurers will pay out far less in claims on those homes relative to the premium they collect, which is why the saving is returned to the owner as a lower premium. The SMI–Impax–Marsh work also cites a major Asian property owner securing an 11.7% cut in property insurance premiums in 2025 by quantifying its climate risk and investing in resilience, with a further reduction tied directly to its loss ratio. Resilience capex, properly evidenced, has a price the insurance market will pay back with reduced premiums.

The second cluster of transition plan attributes in the Ashurst Radley Yeldar report concerns whether climate is embedded in capital allocation, the risk register and remuneration rather than confined to a sustainability report. The insurance signal is one of the clearest tests of whether that embedding is real: a plan whose stated risk appetite does not reflect where the company's own assets have become harder or costlier to insure is describing a governance process that has not yet been reconciled with its own balance sheet.

The third cluster - being explicit about dependencies and broadening the scope of a transition plan beyond climate - is where the insurance lens connects to the widening frontier of risk. Insurability is itself a dependency, and one most plans currently leave unstated. Beyond carbon, the Institute and Faculty of Actuaries' April 2026 Planetary Solvency report⁷ makes the case that nature risk is financial risk, and that climate-only modelling needs to be replaced with integrated climate-and-nature scenarios. The point is not abstract. That report documents physical shocks of exactly this kind already reaching the bottom line. For example, it highlights an agribusiness naming a collapse in Australian almond yields as a primary driver of a 55.7% fall in profit after tax, and a food group taking a £35 million impairment after flooding hit its Mozambican sugar estates. Neither is presented as an insurance story - the report is measuring the hit to earnings - but each describes the kind of concentrated, weather-exposed asset whose future insurability is precisely the type of dependency that should be flagged in a transition plan of a company in an affected sector. As cover for assets and crops like these becomes harder or costlier to secure, this type of assumption belongs inside transition plans, not outside them.

The remaining transition plan attributes in the report - providing decision-ready data and communicating transparently to build trust - are where the insurance signal becomes a discipline and where the legal edge appears. On data, the SMI–Impax–Marsh work points investors towards triangulating models against insurance-market behaviour, and Marsh's own analysis warns of a "silent signal": in a soft market, falling premiums can mask a climate signal that is still rising underneath, so the honest read is of weather-related losses over time rather than this year's rate.

When Ashurst Perkins Coie reviews transition plans, considerations include not only reputational exposure but also litigation risk (i.e. shareholder, consumer-protection, advertising and even fraud claims) and the body of relevant judgments is growing⁸. What is or is not likely to be subject to court or regulator criticism is becoming clearer. If a transition plan does not reflect the signals that a company is receiving from its insurers there is a greater risk that shareholders could bring a claim on the basis that they were misled about the company's risk profile.

Closing the loop - and why this is not circular

A fair question, and one worth answering directly, is whether this creates a circular dependency: corporates need better financial data in their transition plans to help insurers price accurately, but corporates also need to read insurers' pricing to build a credible plan. If both sides are waiting for the other to move first, does this mean nothing moves?

They are not waiting. The sequence has a clear starting point. The insurer prices risk continuously, off its own book and its own models; that price exists whether or not the company has ever written a transition plan. The company reads that price the way it reads any market signal - such as a credit spread or a cost of capital - and where the terms for a material asset or line have moved, it discloses the fact and what it is doing about it. That disclosure then lets the insurer price the next cycle more accurately. This is a sequential, reinforcing loop, not a mutual precondition: the first mover acts on information it already holds, and each subsequent step improves the quality of the next.

Disclosures concerning insurability have a natural home. The Transition Plan Taskforce's Disclosure Framework⁹ does not name insurance signals specifically, but the disclosures it specifies concerning Products and Services and Financial Planning are where material changes in insurability, terms or capacity most logically belong - surfaced as a dependency that has been identified and is being managed. The discipline is calibration, not exhaustiveness: not every premium movement need be disclosed, but a material change to a material exposure. Most transition plans do not yet cover this, because the assumptions in them have not been built to that level of resolution. That gap is an opportunity for the companies that close it, and for the investors who can finally read insurability straight from a transition plan rather than reconstructing it from scattered disclosures.

Why this matters now

None of this asks every company to re-price its transition plan every year. That would cut across the cadence that disclosure architecture itself envisages: IFRS S2¹⁰ anticipates risk assessments revisited on a strategic-planning cycle, commonly every three to five years. The transition plan expectation is a narrower one, and it comes from the investor community rather than a regulator: companies in the most physically exposed sectors and geographies need to re-test the assumptions most likely to move between reporting cycles, because the insurance signal moves inside that gap. In practice this means treating insurability as a monitored dependency between full plan updates, not a variable that lies dormant until the next three-year refresh. The Products and Services and Financial Planning disclosures are the natural place to record both the current position and the sensitivities that would trigger an interim update.

From the SMI–Impax–Marsh roundtables, which brought investors and insurers into the same room, it appears that the companies best placed to deliver that information are not the ones with the most elaborate disclosures, but the ones that have already absorbed a shock and built the muscle to respond. Most firms are at the start of this journey. The destination is becoming clear, and it is reachable: connect the published transition plan to the decision record, and connect the decision record to the signals from the insurance market. A plan that does that is not merely compliant; it is credible to the people whose decisions determine the cost and availability of the capital behind it.

Sources

Aon, Climate and Catastrophe Insight 2026 (April 2026).

Swiss Re Institute, sigma 1/2026: Natural catastrophes in 2025 (March 2026).

Swiss Re, Severe 2022 hail damage in France sets new benchmarks, underscores shift of risk and calls for pricing adjustments (15 November 2022).

Ashurst & Radley Yeldar, Climate transition plans that deliver: value, resilience and credibility (March 2026).

Grantham Research Institute on Climate Change and the Environment & Sabin Center for Climate Change Law, Global Trends in Climate Change Litigation: 2026 Snapshot (LSE, June 2026).

Institute and Faculty of Actuaries & Anglia Ruskin University, Planetary Solvency: Tipping into the wild unknown (April 2026).

Sustainable Markets Initiative, Impax Asset Management & Marsh, Investing in an Era of Extreme Weather (March 2026).

Transition Plan Taskforce, Disclosure Framework.

IFRS S2.

Want to know more?

• Sustainability & Climate Transition Plan Assessment Solution | Ashurst Perkins Coie.
• The basics of transition planning.
• Greenwashing and transition plans article seems not to have been moved from Ashurst site.

Authors: Elena Lambros, Partner, Risk Advisory; Eleanor Reeves, Partner, Environment & Health and Safety; Becky Clissmann, Global Sustainability Expertise Counsel; Tom Cummins, Senior Counsel, Disputes; Nerina Wright – NKR Advisory (Nerina Wright | LinkedIn)