TED Talks Daily

Episode: Amy Barnes: Will climate change make your home uninsurable?
Date: September 15, 2025
Host: Elise Hu
Speaker: Amy Barnes, Climate Risk Advisor
Event: TED Countdown Summit Nairobi, Kenya

Overview

In this episode, climate risk advisor Amy Barnes unpacks a looming crisis: as climate change drives more extreme weather events, large swaths of homes and businesses may become uninsurable. Drawing on her experience in the insurance sector, Barnes explains how risk pricing and insurance availability serve not just as safeguards, but also as warning signals—ones we increasingly can’t afford to ignore. Her talk explores the profound economic and social implications when insurance withdraws, calling for urgent adaptation and resilience strategies to protect communities and financial systems.

Key Discussion Points and Insights

1. The Crucial Role of Insurance in the Modern Economy

• Insurance underpins almost every major financial transaction.
  • [04:23] “Airplanes wouldn't fly, surgeons wouldn't operate, and Taylor Swift would not go on tour without access to insurance.”
• By pooling risk, insurance keeps risks manageable for individuals and businesses, enabling lending and economic growth.

2. How Insurance Signals and Prices Risk

• The cost of insurance ("the premium") reflects the perceived likelihood of loss.
  • [05:36] “Premiums price risk. So the cost of the insurance gives an indication of how likely it is that the insurer thinks that you will suffer a loss.”
• Steps to reduce risk (like burglar alarms or window locks) can lower premiums, promoting preventative action.

3. Climate Change: From Manageable Risk to Near Certainty

• Insurance only functions when extreme weather is a risk, not a certainty.
  • [06:15] “If [extreme weather] becomes a near certainty, insurance becomes unaffordable and potentially not available.”
• Some regions are already experiencing this transition:
  • Australia: By 2100, 1.3 million homes may be uninsurable.
  • New South Wales: 90% of homes at risk.
  • New Zealand & Canada: Significant numbers of homes already close to uninsurable.

4. The Costs of Extreme Weather are Escalating

• Since the 1970s, financial losses from extreme weather have soared.
  • [07:07] “Last year the costs were $320 billion and the LA wildfires on their own, $150 billion.”
• The frequency of catastrophic events is increasing.
  • [07:23] “In the US last year, there were 27 incidents with costs of over $1 billion. That's more than two a month.”

5. Knock-on Effects: Real Estate, Lending, and the Financial System

• As insurance pulls back, homeowners face value losses and difficulty selling properties.
  • [08:02] “Homeowners with no access to flood insurance typically lose 10 to 30% of the home's value. In Florida, that's 20 to 40%.”
• Mortgage security is at risk; by 2035, 30% of US mortgage foreclosures may stem from extreme weather.
  • [08:22] "30% of mortgage foreclosures in the US are expected to be due to extreme weather due to climate change by 2035.”
• Without insurance, access to credit and debt dries up, threatening wider financial stability.

6. A System Under Strain

• Insurance doesn’t fail when it withdraws; it’s doing its job—signaling unmanageable risk.
  • [08:45] “It is not [that insurance has failed]... it's just telling us that the costs are are too high to bear.”

7. Adapting for Resilience: Prevention and Investment

• Insurance pricing can incentivize investments in resilience: for every dollar spent on preventative measures, the payback is $10–$13.
  • [09:14] “Investments in preventative measures have a payback of 10 to $13 for every dollar spent.”
• Most buildings that will exist in 2040 already stand today, so retrofitting—not just designing new resilient buildings—is critical.
  • Examples:
    • Elevating critical electrical equipment.
    • Replacing roofing to resist wildfires.

8. Limitations: The Scale of Resilience Financing

• Grants and resilience bonds exist but remain inadequate in scale.
  • [10:20] “There are grants and resilience bonds that can help with this, but their scale is woefully inadequate.”

9. Parametric and Microinsurance as Short-term Solutions

• New insurance products (like parametric insurance) can help:
  • In Kenya, supporting small farmers when drought hits.
  • In India, protecting workers when extreme heat stops markets.
• But these are also threatened as risk increases.
  • [11:13] “These insurances too will become unavailable and unaffordable if the risk becomes a certainty.”

Notable Quotes and Memorable Moments

• On insurance as an early warning system:
  Amy Barnes [11:43]: “Insurance is doing exactly what it's supposed to: it's pricing risk and it's giving us a warning sign that assets may be worth less and credit could be less available as banks either refuse or charge more for credit because insurance isn't there. Which means one of the key tools in our toolkit may not be available when we need it most.”

• On reframing the dilemma:
  Amy Barnes [12:18]: “I don't want [insurance] to be seen as a problem. I want it to be part of the solution. Insurance is a sophisticated financial tool that provides us all with an incentive to act as a society. And that's what we need to do.”

Key Timestamps

• [03:53]: Amy Barnes begins her talk.
• [04:23]: Insurance’s role in enabling society and the economy.
• [05:36]: How risk is priced; premiums as warning indicators.
• [06:15]: When risk shifts from possibility to certainty.
• [07:07]: Escalating costs of extreme weather.
• [08:02]: Impact on home values and mortgages.
• [09:14]: Prevention’s ROI; urgency of adaptation.
• [10:20]: Retrofitting existing buildings; limits of current funding.
• [11:13]: Challenges of microinsurance and parametric insurance.
• [12:18]: Barnes’s call to view insurance as a tool for resilience and societal action.

Tone and Style

Amy Barnes balances urgency with pragmatism, delivering clear and accessible explanations of insurance mechanisms while sounding the alarm about their limits in a warming world. Her tone is at once insightful and motivating, using relatable analogies and real-world data to emphasize that adaptation is not just possible but necessary.

Summary Takeaway

Climate change threatens to render vast assets uninsurable, potentially upending personal security, property values, and the very machinery of the global financial system. Insurance, far from failing us, is providing a critical signal—one urging policymakers, industries, and individuals to invest in adaptation and resilience before these safety nets, and the systems that depend on them, unravel. The time to act is now.