Essay by Eric Worrall
“… Action urgently needed to save the conditions under which markets – and civilisation itself – can operate …”
Climate crisis on track to destroy capitalism, warns top insurer
Action urgently needed to save the conditions under which markets – and civilisation itself – can operate, says senior Allianz figure
Damian Carrington Environment editorThu 3 Apr 2025 20.41 AEDT
The climate crisis is on track to destroy capitalism, a top insurer has warned, with the vast cost of extreme weather impacts leaving the financial sector unable to operate.
The world is fast approaching temperature levels where insurers will no longer be able to offer cover for many climate risks, said Günther Thallinger, on the board of Allianz SE, one of the world’s biggest insurance companies. He said that without insurance, which is already being pulled in some places, many other financial services become unviable, from mortgages to investments.
Global carbon emissions are still rising and current policies will result in a rise in global temperature between 2.2C and 3.4C above pre-industrial levels. The damage at 3C will be so great that governments will be unable to provide financial bailouts and it will be impossible to adapt to many climate impacts, said Thallinger, who is also the chair of the German company’s investment board and was previously CEO of Allianz Investment Management.
…
Allianz Insurance Board Member Günther Thallinger’s original post on Linked In;
Climate, Risk, Insurance: The Future of Capitalism
Günther Thallinger
Allianz SE
March 25, 2025CO₂ emissions directly increase the amount of energy trapped in the Earth’s atmosphere. This is not a vague or future issue—it is physical reality. The more emissions, the more energy retained. The more energy, the more extremely the atmosphere behaves. Storms intensify. Heatwaves last longer. Rain falls harder. Droughts cut deeper. This is the first principle.
…
The insurance industry has historically managed these risks. But we are fast approaching temperature levels—1.5°C, 2°C, 3°C—where insurers will no longer be able to offer coverage for many of these risks. The math breaks down: the premiums required exceed what people or companies can pay. This is already happening. Entire regions are becoming uninsurable. (See: State Farm and Allstate exiting California’s home insurance market due to wildfire risk, 2023).
…
Once we reach 3°C of warming, the situation locks in. Atmospheric energy at this level will persist for 100+ years due to carbon cycle inertia and the absence of scalable industrial carbon removal technologies. There is no known pathway to return to pre-2°C conditions. (See: IPCC AR6, 2023; NASA Earth Observatory: “The Long-Term Warming Commitment”)
At that point, risk cannot be transferred (no insurance), risk cannot be absorbed (no public capacity), and risk cannot be adapted to (physical limits exceeded). That means no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.
…
Read more: https://www.linkedin.com/pulse/climate-risk-insurance-future-capitalism-günther-thallinger-smw5f/
Günther doesn’t go into detail about how Capitalism will solve the alleged climate crisis in his main article, but one of the comments and answers associated with the article is revealing.
Editor at Insurance Asset Risk & Corporate Disclosures
Thanks Guenther, can the only two levers you mention truely be achieved without de-growth? (Which wouldn’t be very capitalistic)
Replies on Vincent Huck’s comment
Günther Thallinger AuthorAllianz SE
Vincent Huck I believe we need to rethink the concept of growth. A starting point should be that financial information and sustainability information (regular reporting, quality assured) are integrated. This may help us to quickly switch away from an extractive to a regenerative and no waste economy. Growth of such an economy may actually be very wanted.
Read more: Same link as above
The no waste economy proposed by Günther Thallinger is a fantasy.
Yesterday I had to change all four tires on my 4WD, because they wore out in just a couple of years – road maintenance in my corner of Australia is somewhat neglected. The roads also wear out quickly in Queensland, thanks to decades of government neglect and our tropical climate – and the high proportion of drivers who embrace the safety of driving rugged 4WD vehicles, because of the state of the roads and because of the high risk of surprise animal encounters.
How do you apply the concept “zero waste” to consumables like tires and roads? There is no chance of recovering the original raw materials in a form which can be meaningfully recycled. Even if everyone switched to rail transport, railway lines also wear out – and we would need a lot more railway lines.
Replacing stuff which wears out accounts for most of that “extractive” economy Günther seems to despise.
As for Californian fire risk, which featured in Günther’s thesis about insurance becoming unviable, this is a problem caused by incompetent management of dry fuel load, not climate change. Clear at the tinder, with bulldozers if necessary, eliminate the fire risk. There can only be fire risk if the fire has something to burn.
Günther Thallinger currently serves as head of sustainable investment at Allianz – probably a rather thankless job these days, given how most of the world is backing away from green investments.
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