Günther Thallinger, a board member at Allianz SE, one of the largest asset managers in the world, has raised the alarm on global warming. If ever passed, he warns that it would have disastrous effects upon the global economy. At a recent member event, Thallinger pointed to the worsening climate crisis as one such existential threat. He explained that if we don’t act, it will be drastically more expensive than changing the way we work and adjusting to new realities.
Thallinger warned that with increasing temperatures around the globe, the industry is confronted with a challenge like never before. He noted that current policies are projected to result in a global temperature increase of between 2.2°C and 3.4°C above pre-industrial levels. This continuing trend endangers the property insurance industry. It is approaching a tipping point where affordability of coverage for a wide range of climate-related perils is no longer attainable.
The math breaks down: the premiums required exceed what people or companies can pay. This is already happening. Entire regions are becoming uninsurable,” Thallinger explained. Taalas highlighted the difficulty of trying to insure against climate damage if we allow global temperatures to increase 3°C. On top of this, he cautioned that government assistance could too turn unsustainable.
Thallinger underscored scary trends by sharing how disaster recovery spending has increased seven times in Australia between 2017 and 2023. This stark upsurge is irrefutable proof of the enormous economic cost imposed by climate disasters. He highlighted concrete examples of how insurance companies have withdrawn coverage for home insurance in California. The agency’s decision is a direct response to the growing threat of wildfires.
Throughout his analysis, Thallinger impressed upon the urgency of action on climate change, emphasizing the need for swift and decisive action. As I always say, the cost of doing nothing is greater than doing our transformation and adaptation. If we succeed in our transition, we will enjoy a more efficient, competitive economy and a higher quality of life. “He continued that this isn’t just a housing problem, but a problem that extends to infrastructure, transportation, agriculture, and industry.
Thallinger’s concerns extend beyond immediate financial implications. He raised the specter that at 3°C of global heating, all the things that we enjoyed about modern civilization would be called into question. “No more mortgages, no new real estate development, no long-term investment, or financial stability will be possible,” he affirmed.
The Allianz executive underscored an alarming retreat from climate action by financial institutions. That change was more pronounced following the election of former U.S. President Donald Trump. This shift risks undermining progress made in addressing climate issues and could exacerbate the challenges faced by the insurance industry.
Now, one of the world’s largest insurance leaders has provided that horrible assessment. It unambiguously describes the fiscal dangers and the existential perils that climate change presents. It must be that foundation for renewed action, especially in those countries of the global south. It is a signal that action at last matches urgency,” — Nick Robins, LSE, sustainable finance expert
Thallinger finished on an optimistic note, urging us to use the technologies at our disposal to replace fossil-fuels with zero-emission energy. And while he was very bullish on what innovation could do, he emphasized that we needed to move faster and implement it at scale. The encouraging part is that we already possess the technologies required to transition from fossil combustion to zero-emission energy sources. The only thing they’re missing, as far as I can tell, is speed and scale. This isn’t just about preserving the great things markets and finance have done over the past couple centuries.
Thallinger, in his dual roles as chair of Allianz’s investment board and former CEO of Allianz Investment Management, has tremendous clout. Load financial strategies driven by climate adaptation and risk assessment. As his warnings illustrated, the insurance sector acts as a “canary in the coalmine” for climate impacts. This is a worrisome harbinger of deeper systemic risks that are coming just over the horizon.