Insurance, equity and nature in England’s changing climate

Pranav Shankar Kaundinya and Mariam Parekhelashvili present eight reflections on how flood insurance can be made more equitable as flood risk intensifies in England – and consider how nature might be integrated into the conversation.

Over 6.3 million properties across England are currently exposed to significant risk of flooding or coastal erosion, with this number set to rise with intensifying climate risk. A decade into the operation of the reinsurance scheme Flood Re, and with the recent announcement by the Department of Environment, Food and Rural Affairs (Defra) and the Environment Agency of the Natural Flood Management (NFM) scheme, nature-based solutions and insurance are seen as vital tools to reduce flood risk.

But who gets protected and how depends not solely on exposure but also on access to resources and capacity to act. This creates an uneven playing field and raises an important question: what does fairness look like when protecting people (and nature) from climate threats? We outline eight key points for consideration.

1. Understanding ‘who’ a policy targets is more complex than it seems. Vulnerability is not defined by a single characteristic but shaped by an amalgamation of overlapping factors such as where someone lives, their income, ethnic or cultural background, gender identity, migration status or housing situation. There is no one-size-fits-all rule to foster inclusivity; on the contrary, decisions must be grounded in context.
2. Equity perspectives can vary across the insurance ecosystem. What equity means in practice and how it could be addressed depends on where an individual sits within the insurance ecosystem. A claims-adjuster may have a very different view of what equitable looks like versus a modeller who may take a longer-term, more macro-level perspective. Integrating equity into insurance policy design needs to reconcile these differences in perspective across an organisation to successfully address an inequity.
3. What can be addressed depends on the scope of the policy. Which stakeholders get to shape the process when designing and reforming an insurance policy that protects infrastructure or natural assets against catastrophe risk depends on whether it operates at a micro (household), meso (community) or macro (national) level. This in turn influences which equity challenges are to be considered and addressed. While insurance to households could assist poorer households to invest in property-level flood resilience measures, at the national level larger-scale interventions are a better fit.
4. Integrating versus adding-on equity. Ingraining equity thinking into decision-making and insurance product design, rather than it being an after-thought, could drive deeper systemic change. This could mean the difference between an insurer considering affordability across its product line from the design stage or tacking a simple cross-subsidy on top of the existing base policy which may not always remain fit for purpose.
5. It takes real effort, not just good intentions. Affordability is not the be-all-and-end-all of equity in insurance. Making outcomes truly equitable takes extra work – from outreach and trust-building to tailoring processes for meaningful participation of the communities who languish at the margins. Without that additional effort, equity goals risk remaining on paper only. Thus, while affordability could be one option, there are other considerations that can help address inequities, such as the type of trigger, claims process or evenness of coverage.
6. From weighing costs and benefits to balancing responsibilities and capabilities. There is a need to move beyond the basic question of ‘who pays and who benefits?’ Instead, we need to ask, ‘who has the capacity to act and which responsibilities can they bear?’ Disaster risk is a collective risk with a collective cost and therefore needs collective action to be tackled.
7. You cannot make bricks without clay! Existing data rarely provide a full picture of vulnerability, leading to potentially biased reflections of risk and capabilities, which impairs decision-making. Without better data and strong community engagement, even well-intentioned policies can reinforce the very inequalities they aim to address. The need for quantification also raises the methodological and philosophical issue of how ‘equity’, a complex, multi-dimensional concept, can be measured numerically.
8. Equity should not be assumed; it needs to be tracked. The shortfall in finance for climate change adaptation measures needs to be plugged with public subsidies, grants and philanthropic aid. Resource allocation decisions will dictate whether insurance projects serve those who need them the most. The philanthropic and development community must build in safeguards and checks to ensure that the resources actually reach and benefit the poorest and most vulnerable.

These initial reflections demonstrate that there is no single, global lens that can be used to find a straightforward answer. Instead, a reassessment is needed of the fundamental assumptions and logic on which insurance policies against climate risk and to protect natural assets are built and operated. Practitioners, communities, policymakers and donors need to continue to engage with each other, to strike a balance between a principled and pragmatic solution design. As climate and nature risks continue to intensify, it is even more essential to create a robust and sustainable solution that maintains social legitimacy and sustains stakeholder support into the long term.

We also need to address a further fundamental question: how do we account for nature in climate insurance design? If we are serious about nature-based solutions for climate mitigation and adaptation, should ecosystems themselves not be considered stakeholders with legitimate claims? What would this look like in practice, and is it even feasible?

The authors have drawn on insights from a workshop led by MCII and the NATURANCE team at the Grantham Research Institute during the ‘Scaling Insurance Impact for Communities and Ecosystems’ event jointly hosted by The Nature Conservancy, Consensus Building Institute and Howden Foundation. They thank the participants for their input and Swenja Surminski for her review comments. The commentary is based on a blog first published by NATURANCE on 28 July 2025. NATURANCE’s report on equity will be published in Autumn 2025.