TED Talks Daily - Amy Barnes: Will climate change make your home uninsurable? | TED Countdown Summit 2025

Episode Date: September 15, 2025

Insurance is the hidden engine that keeps the economy churning, but climate change is making home insurance unaffordable for many people, says climate risk advisor Amy Barnes. She reveals why soaring premiums aren't just bad news for homeowners, but also a flashing red signal for the global financial system — and why investing in resilience now could change everything.For a chance to give your own TED Talk, fill out the Idea Search Application: ted.com/ideasearch.Interested in learning more about upcoming TED events? Follow these links:TEDNext: ted.com/futureyouTEDSports: ted.com/sportsTEDAI Vienna: ted.com/ai-viennaTEDAI San Francisco: ted.com/ai-sf Hosted on Acast. See acast.com/privacy for more information.

Our homes are ready for any kind of cuts. We have bandages, sprays, gels to treat them. But we're quick to ignore gum bleeding and inflammation. We brush it off, literally. Use Colgate Periogard to significantly reduce gum bleeding and inflammation. It helps fight bacteria that can lead to early gum disease and improves gum health with daily use. So, the next time your gums feel sensitive, don't ignore it.

Help take care of it with Colgate periogard. Healthy gums, confident smile. This podcast is brought to you by Wise. the app for international people using money around the globe. With Wise, you can send, spend, and receive up to 40 currencies with only a few simple taps. Plus, Wise won't add hidden fees to your transfer. Whether you're buying souvenirs with pesos and Puerto Vallarta or sending Euros to a loved one in Paris, you know you're getting a fair exchange rate with no extra markups.

Be smart. Join the 15 million customers who choose Wise. Download the Wise app today or visit Wise.com. Terms and conditions apply. This episode is sponsored by Airbnb. On one of my first visits to Vancouver, I spent the morning biking around Stanley Park, just me, the trees, the seawall, and the quiet. I grabbed lunch by the harbor and thought, next time I want to come back here with my people. When you're traveling with family or friends, you want more than just a place to sleep. You want a kitchen for big pancake breakfasts, a living room where everyone can pile in and play games and laugh about the day, and space to stay up late without whispering

in the dark. That's why for our next trip I'm looking at Airbnb. The homes feel personal and thoughtful and with guest favorites, the most loved homes across Canada, it's easy to find a stay that's already made someone else's trip special. Now I just need to decide, is it Tefino for beachwalks and seafood dinners or a cozy cabin near Whistler with a view of the mountains? You're listening to TED Talks Daily, where we bring you new ideas to spark your curiosity every day. I'm your host, Elise Hu. When the wildfires broke out in Los Angeles, California earlier this year, reports started coming out about insurance companies, pulling back coverage from the people who needed it most. This trend is only expected to increase as companies try to remove as much risk as possible.

In her talk, Climate Risk Advisor Amy Barnes explains why we need to reframe risk insurance. as a warning bell. She says adaptation and smarter tools can help us get ahead of disasters and invest in resilience before it's too late. When I first joined the insurance industry, I realized that telling people about it was the fastest way for them to lose interest.

Fortunately, that's changed. Risk is so much higher. on people's personal and professional agendas. We know that it pays to manage risk. And my industry, our ability to price risk, means that we have tools and products that can give a signal as to how we might adapt to climate change. So when I joined this industry, I knew nothing about it.

But in my first week, I learned its role in a modern economy. Aeroplanes wouldn't fly, surgeons wouldn't operate, and Taylor Swift, would not go on tour without access to insurance. In fact, very few people will take on a major financial commitment without it. It works because the losses of the few are paid for by the many, making risks manageable.

And so banks rely on insurance, and if anyone here has built a wind farm or bought a home, the banks will have required you to have insurance in place. In fact, many, maybe even most financial transactions are contingent on insurance being in place. And so insurance is the lubricant of the financial services industry, and without insurance, you'll struggle to access debt. Last bit of the insurance lesson, I promise.

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. And we all know this. Young, inexperienced drivers pay high insurance premiums. Yet on my home, if I install a burger alarm or locks on my windows, I know the cost will be lower.

So the premium indicates how likely it is you will suffer a loss, but there are things that we can do to reduce the risk and reduce the cost. So what's any of this got to do with climate change? Well, importantly, insurance only works while extreme weather remains a risk. If it becomes an near certainty, insurance becomes unaffordable and potentially not available.

So we have an industry whose core competency is pricing risk, telling us that in places the cost of risk is too high for people to pay. And at the same time, we have a financial services industry that relies on insurance to provide loans, which in turn make the financial system work. Now, the signals are really clear. We're told that in Australia, by 2100, 1.3 million homes will be uninsurable,

due to extreme weather. And in New South Wales, that's 90 percent of people's homes. In New Zealand, it's 10,000 homes uninsurable by 2050. And across the world in Canada, the Bureau of Insurance says that nearly 10 percent of homes are already close to uninsurable and represent 90 percent of the industry's losses. Why?

Extreme weather due to climate change. Now, since the 1970s, the cost of extreme weather events has increased every decade. Last year, the costs were $320 billion, and the LA wildfires on their own, $150 billion. But it's not just severe losses. Sticking in the U.S., last year, there were 27 incidents with costs of over $1 billion.

That's more than two a month. So the equation has flipped. It's no longer just the losses of the few. It's now the losses of the many. And as a result, we're hearing stories of people struggling to answer. access insurance. And if you can't get insurance for your home,

your house is worth less and you'll struggle to sell. Data in the UK shows that homeowners with no access to flood insurance typically lose 10 to 30 percent of the home's value. In Florida, that's 20 to 40 percent. And 30 percent of mortgage foreclosures in the US are expected to be due to extreme weather, due to climate change by 2030. So there's an indication of people are saying that insurance has failed,

but it is not. It's just telling us that the costs are too high to bear. Simply put, without access to insurance, people will struggle to secure debt, they will struggle to sell their homes, they will struggle to invest in their businesses. And we're seeing this happen due to climate change. I'm afraid there's another challenge.

Loans and mortgages are normally taken out for long periods. It may be 20 years or more. And so you may build your wind farm or buy your home, assuming that you can use insurance to manage your risk. Yet over time, the frequency and severity of extreme weather events means that insurance becomes unaffordable. And so you've lost a key tool in your financial resilience toolkit, and you're more likely to default on your loan.

And so we're also in a situation where the finance industry are seeing asset devaluation, They're seeing increased chances of default, and so we could have liquidity crunches in some areas where investors choose to exit the areas with the most risk. So it's clear we need to act. And the scientists have been telling us this for a really long time. It's just the finance industry is saying it now, too.

Beyond cutting emissions, which we need to do, there are things that we can do. One of the fantastic things about having a price for risk is it incentivizes you to invest in resilience. And we know that investments in preventative measures have a payback of 10 to 13 dollars for every dollar spent. So as an industry, we need to do far more to tell people that prevention saves money.

Now, the cheapest time to invest in resilience is when you build new things. We should only build resilient new structures. But 80 to 85 of the buildings that exist everywhere in the world today, will still be here in 2040. So that means we also need to retrofit. Some of those actions may be things like lifting electrical equipment off the ground floor of buildings to reduce damage from flood,

or you may need to replace the shingles on your home with a living roof to make you more resilient to wildfire. But these cost money, and some of the interventions cost a lot of money. Now, there are grants and there are resilience bonds that can help with this, but their scale is woefully inadequate. So as an insurance industry,

we need to do more to promote preventative measures so that we're reducing the risk now and saving for the future. Now, there are lots of roles for insurance to support climate change. One other that I want to mention is I've been talking about the impact of insurance on property damage. But there's a type of insurance called parametric insurance that supports people in stresses like extreme heat or water stress. And right here in Kenya, we have a program supporting small-scale farmers.

So in the events that the rains don't come and the crops fail, or in India, where extreme heat means it's unsafe to work in the market, the micro-insurance can replace people's livelihoods. And these insurances are impacting hundreds of thousands of people's lives globally for the better. but these insurances, too, will become unavailable and unaffordable if the risk becomes a certainty. So insurance is doing exactly what it's supposed to.

It's pricing risk, and it's giving us a warning sign. The 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. So what is my vision for insurance?

I don't want it 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. We need to invest in adaptation and resilience, so the risk remains manageable, enabling people and businesses

to continue to invest in their future. Thank you. That was Amy Barnes at the TED Countdown Summit, Nairobi, in Kenya in 2025. If you're curious about Ted's curation, find out more at TED.com slash curation guidelines. And that's it for today. Ted Talks Daily is part of the TED Audio Collective. This talk was fact-checked by the TED Research Team and produced and edited by our team, Martha Estefanos, Oliver Friedman, Brian Green, Lucy Little, and Tonsica Sung Marnivang. This episode was mixed by Christopher Faisi Bogan.

Additional support from Emma Tobner and Daniela Balareso. I'm Elise Hugh. I'll be back tomorrow with a fresh idea for your feed. Thanks for listening. This episode is sponsored by Airbnb. On one of my first visits to Vancouver, I spent a... the morning biking around Stanley Park. Just me, the trees, the seawall, and the quiet. I grabbed lunch by the harbor and thought, next time I want to come back here with my people. When you're traveling with family or friends, you want more than just a place to sleep. You want a kitchen

for big pancake breakfasts, a living room where everyone can pile in and play games and laugh about the day, and space to stay up late without whispering in the dark. That's why for our next trip, I'm looking at Airbnb. The homes feel personal and thoughtful. and with guest favorites, the most loved homes across Canada, it's easy to find a stay that's already made someone else's trip special. Now I just need to decide, is it Tefino for beachwalks and seafood dinners, or a cozy cabin near Whistler with a view of the mountains? Our homes are ready for any kind of cuts.

We have bandages, sprays, gels to treat them. But we're quick to ignore gum bleeding and inflammation. We brush it off, literally. Use Colgate periogard to significantly reduce gum bleeding and inflammation. It helps fight bacteria that can lead to early gum disease and improves gum health with daily use. So, the next time your gums feel sensitive, don't ignore it. Help take care of it with Colgate periogard. Healthy gums, confident smile.

This podcast is brought to you by Wise, the app for international people using money around the globe. With Wise, you can send, spend, and receive up to 40 currencies with only a few simple taps. Plus, Wise won't add hidden fees to your transfer. Whether you're buying souvenirs with pesos and Puerto Vallarta or sending euros to a loved one in Paris, you know you're getting a fair exchange rate with no extra markups. Be smart. Join the 15 million customers who choose Wise. Download the Wise app today or visit wise.com.

Terms and conditions apply.