The UK’s Climate Change Committee, the independent statutory body that advises government and reports to Parliament, has warned that that climate impacts are escalating faster than the country’s ability to cope with them. It has published its latest assessment of the UK’s climate adaptation and readiness, suggesting that costs on businesses will rise if adaptation to heat, flooding and drought is not enhanced.

The report sets out a stark picture of rising flood, heat and infrastructure risks across the UK, concluding that climate change is already imposing material costs on households, businesses and the financial system, with impacts expected to intensify without a step change in adaptation.

For insurers, the findings closely reinforce the Prudential Regulation Authority’s updated supervisory expectations under SS5/25, underlining that climate risk is no longer a long term or theoretical issue, but a current and financially material risk requiring stronger governance, scenario analysis and decision useful risk management.

Baroness Brown, chair of the CCC’s adaptation committee, said: “Our lives, our landscapes and our homes are under increasing pressure from the changing climate. But we are not powerless. In an increasingly unstable world, being well adapted to climate change is fundamental to securing our food, energy and economic security.  

“This report carries a message of hope. The solutions already exist, and proven technologies are available now to help the UK adapt effectively. With the right decisions and actions, we can protect the people and the places we love.”

The CCC highlights the interconnected nature of climate impacts, spanning property damage, infrastructure disruption, supply chains, labour productivity and life & health, pointing to the need for insurers to move beyond single hazard assessments and adopt more system wide views of risk. While the report focuses on the UK, it also highlights that similar adaptation gaps and physical risk pressures apply globally, with implications for insurers writing international business.

Cormac Bradley, senior actuarial director at insurance risk and actuarial advisory firm Broadstone, added: “This report marks an important shift from climate risk awareness to climate risk readiness. As Parliament’s independent climate advisers, the CCC is clear that climate impacts are already affecting the economy and financial system.

“For insurers, this provides a strong evidence base to identify what is genuinely material and to strengthen climate risk frameworks in line with the PRA’s SS5/25 expectations. The message is no longer about future risk, it is about how firms are managing climate risk today.”

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