There are challenges that the insurance industry faces, even though it can look like a licence to print money, Since the Big Bang of the nineties, when deregulation allowed the industry to flourish, insurance now accounts for 2.5% of UK GDP. Not bad money for an industry that is a cost to society, rather than a benefit.

Until now the business model has been simple; charge a premium based on the risk profile of the customer, avoid high risk customers altogether and invest the payments you receive in the markets to make even more money. And, unfortunately, payout when someone makes a claim, but keep the legal profession gainfully employed to ensure that doesn’t happen too often.

If you find claims are rising, imply put up th premiums next year. Which is why we’ve had several years were premiums have grown significantly faster than inflation. The consequence of that is people from lower- and middle-income households simply can’t afford the insurance, so they avoid it altogether or under-insure.

Phil and Steve discuss the merits of government-run insurance. We already have it in health, of course. The problem with having it applied more broadly is that it won’t alert us to the impact of climate change. As insurance moves from covering us for episodic events, to systematic change, the business model folds. Steve’s hope is that, as this happens, the industry starts to squeal and wakes us all up to the profound impact of climate change. It acts as the canary in the coal mine and becomes the first industry to lobby for us to take it seriously. Although, with them still enjoying healthy profit margins, it’s not happening yet.

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Insurance, the canary for climate change