The UK has recently experienced unprecedented spring weather, including extreme temperatures, wildfires, and torrential floods. These shifts aren’t just temporary—according to the Met Office, climate change is expected to result in “hotter and drier summers” and “more frequent and intense weather extremes”. As such, many businesses, particularly those reliant on predictable climates, are already feeling the strain.
The agricultural sector is especially vulnerable to climate change. This year, farmers have been greatly impacted by weather shifts. According to a 2025 report by Energy and Climate Underwriting, “whilst shoppers have been partly insulated by imports picking up some of the slack, Britain’s farmers have borne the brunt of the second worst harvest on record.”
Speaking on the specific impacts of warmer temperatures, a Descartes Underwriting representative told Insurance Business: “Sustained higher atmospheric temperatures have been shown conclusively to decrease milk yields in dairy cattle, for example. Since warmer air holds more moisture, crops can be starved of essential rainfall causing drought conditions, and, shortly after, when the heavens open, may be subject to flood conditions, or battered by hail.”
They added: “Even honey harvests are affected. Where it is too warm, bees cannot survive. Nor can some of the flowers they pollinate.”
While traditional insurance has long protected against physical damage, many of today’s climate risks have non-physical consequences - such as heat-induced business interruption or water shortages impacting production. For brokers advising clients on more agile coverage, parametric insurance is emerging as a vital tool. “Their triggers do not rely on physical damage or even counting up the actual amount of money lost, parametric coverage provides swift payments which can be used, for example, in the case of heat stress, to provide cooling equipment for barns, or in the case of crop failure following a hurricane, loan-payment holidays.” With parametric data, it is all about the accuracy, reliability and timelines to ensure effectiveness.
Brokers can support clients with non-physical climate risks by:
As climate risks escalate, brokers have a key role to play in helping clients assess whether their current policies still match the evolving threat landscape. “Every insurance buyer should work closely with their broker to determine the possible impacts of climate change,” the representative said. “Many brokers, alongside specialist insurers, have a very good understanding of the scenarios. They should ensure coverage is sufficient to protect against direct and indirect losses arising from those possibilities. Conventional coverage may struggle with some of them, especially intangible losses.”
Potential coverage considerations for climate-dependent businesses include:
In a rapidly warming world, traditional underwriting—based on historical loss data—is no longer enough. Brokers need to consider how advanced modelling and forecasting tools are being used to project the next generation of climate risks. “Most risk analysis and insurance are based on a backwards-looking understanding of risk,” the Descartes representative explained. “Underwriters and analysts look at past events to understand what will happen in the future. But climate change derails that approach. We are modelling all kinds of climate scenarios to determine what will happen to the weather in warmer environments – it could be more intense hurricanes, larger, more frequent hailstones, or intense rainfall following a sustained drought, for example – then calculating the impact of those events on specific insureds.”
A study published in McKinsey found that leading insurers who built advanced data and analytics underwriting solutions saw business premiums “increase 10-15%.”
Finally, brokers must look beyond policy wording and encourage clients to think strategically about their vulnerabilities - especially when physical damage doesn’t trigger a claim.
“Quite simply, most policies still respond to physical damage,” the representative said. “But that might not occur when floods prevent access to your business, for example, or when an earthquake in Taiwan halts your production lines in the UK because your microchip supply has failed. Parametric insurance covers such eventualities by focussing on the occurrence of the peril, rather than the cash cost.” And while insurance is an essential tool, clients also need to take practical, preventive steps: “The mitigation steps are different for all of those scenarios,” they added, “but the starting point is the same for each: consider what the impact of an event of one type or another would be on your property, your supply chain, your customer base, your market access, your staff, and so on. If it could cause a serious problem, find ways to mitigate.”
Other practical mitigation steps businesses can take include:
