Report

Pooling natural risks: building a Social Security System for Climate?

Climate change is radically reshaping natural risk management. It is shifting insurance balances and rendering certain sectors obsolete. It may prove as transformative as the Industrial Revolution to social risk coverage in the XIXth Century. While natural disasters have always occurred, recent years have been marked by an alarming surge of extreme natural events (cyclones; storms and torrential flooding; multi-year droughts; deadly hailstorms, etc.). Both insurers, concerned with a sharp rise of weather-related claims, and households, faced with the prospect of claim denial, question the ability of the existing system to cover losses.

Published on : 12/06/2025

Temps de lecture

4 minutes

Autrices

Mathilde Viennot

Cheffe de projet

Coordonnatrice

Marine de Montaignac

Cheffe de projet

Autrice

Alice Robinet

Cheffe de projet

Autrice

This report from the Haut-commissariat à la Stratégie et au Plan[1] examines the challenges faced by the current approach of pooling (i.e. mutualizing) risks on residential housing, from an economic, historical and political perspective. It is the fruit of a two-year multidisciplinary collaboration involving insurers, reinsurers, regulators, actuaries, geographers, climate change economists, senior social protection officials, lawyers, economists and social historians. This report investigates the overall insurability of climate risks (environmental sustainability), the relevance of current Cat Nat riskmanagement program (financial sustainability), and the preparedness of the current insurance system to provide collective and national solidarity in the face of natural hazards (social sustainability).

It suggests three structural reform scenarios. Their relevance will depend on how climate losses evolve over time and on our current system’s resilience. It specifically questions whether the French Social Security System, which turns 80 this fall, could inspire a new climate solidarity. This analogy allows us to take a fresh look at shared individual and collective responsibilities for systemic risks, by linking the concepts of insurance, assistance, prevention and compensation.

The first scenario offers basic insurance as well as additional protection against climate hazards, while mitigating risks between the private and public insurance markets. The government intervenes in regulating the insurance market and guarantees the insurability of climate risks.

The second scenario extends public reinsurance to every climate risk, therefore erasing their exceptional nature. It fully entrusts the State with insuring risks that become uninsurable, such as drought. The government would then manage all climate risks more directly, enabling a more proactive housing adaptation policy, offering prevention subsidies and encouraging residents to leave high-risk areas.

The third scenario calls for a complete nationalization (i.e. universal and unified coverage) of climate risks. It has a restorative dimension, introducing an indemnity branch, and reinforces prevention, creating a risk prevention circuit and adapting housing to climate risks. Climate-related contributions would replace insurance premiums. A “climate social security system” would then take shape, providing a response to climate risks, very much like the social security system responded to social risks in 1945.

[1] HCSP (2025), Repenser la mutualisation des risque climatiques, report by Mathilde Viennot (coord.), Marine de Montaignac and Alice Robinet, june.

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