The climate crisis is on track to destabilize and ultimately destroy global capitalism, according to a stark warning from one of the world's largest insurers. Allianz SE board member Gunther Thallinger has sounded the alarm: the growing cost of climate-driven disasters threatens to break the financial sector's ability to operate -- starting with insurance.
Speaking as both a top executive of Allianz and chair of its investment board, Thallinger said the world is fast approaching temperature thresholds beyond which many climate risks will simply become uninsurable. And without insurance, critical sectors of modern finance -- from mortgages and real estate to infrastructure and industry -- will cease to function.
"Heat and water destroy capital," Thallinger wrote in a widely discussed LinkedIn post. "Flooded homes lose value. Overheated cities become uninhabitable. Entire asset classes are degrading in real time."
Current government policies still allow global carbon emissions to rise, putting the world on track for a temperature increase between 2.2°C and 3.4°C above pre-industrial levels. The damage expected at 3°C is so severe, Thallinger warned, that it will overwhelm governments' ability to provide financial relief or adaptation measures.
Already, the scale of climate-related damage is staggering. Insurance company Aviva estimated that extreme weather caused $2 trillion in damages globally between 2013 and 2023. In 2024 alone, GallagherRE reported climate losses of $400 billion. Insurers like Zurich have declared it "essential" to reach net-zero emissions by 2050 to avoid systemic collapse.
But Thallinger warns that time is running out -- and that the breakdown is already underway. In parts of California, for example, insurers have stopped covering homes due to escalating wildfire risks. Entire regions, he said, are becoming "uninsurable."
"As temperatures rise to 1.5°C, 2°C, 3°C, insurers will no longer be able to offer coverage for many of these risks," Thallinger said. "The math breaks down: the premiums required exceed what people or companies can pay. This is already happening."
Our updated climate model, now integrating complex social-ecological factors as part of a dynamic and non-linear system, shows that global temperatures could rise by up to 9°C within this century--far beyond previous predictions of a 4°C rise over the next thousand years. This level of warming will render much of the world uninhabitable within this century.
Without insurance, the ripple effects spread rapidly through the financial system. Mortgages, infrastructure investment, agriculture, and transportation all rely on insurance to manage risk. Remove that foundation, and the global credit system starts to seize up -- a "climate-induced credit crunch."
"This is a systemic risk threatening the very foundation of the financial sector," Thallinger warned.
Nick Robins, chair of the Just Transition Finance Lab at the London School of Economics, called the analysis "devastating," adding that it highlights not only a financial crisis but a civilizational one.
Thallinger also pushed back on the comforting narrative that humanity can simply adapt its way through climate breakdown.
"There is no way to 'adapt' to temperatures beyond human tolerance," he wrote. "Whole cities built on flood plains cannot simply pick up and move uphill."
Australia's disaster recovery spending has already increased sevenfold between 2017 and 2023. No government, Thallinger argued, will be able to cover the cost when multiple extreme events strike in rapid succession -- something climate models increasingly predict.
At 3°C of warming, the damage becomes uninsurable, governments become financially crippled, and adaptation becomes largely impossible.
"That means no more mortgages, no new real estate development, no long-term investment, no financial stability," Thallinger concluded. "The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable."
The only solution, Thallinger said, is to end fossil fuel burning at unprecedented speed and scale. Everything else -- delay, half-measures, false comforts -- will only hasten systemic collapse.
"The good news is we already have the technologies to switch from fossil combustion to zero-emission energy," he said. "The only thing missing is speed and scale. This is about saving the conditions under which markets, finance, and civilization itself can continue to operate."
Or, as Janos Pasztor, former UN assistant secretary-general for climate change, put it: "The insurance sector is a canary in the coal mine when it comes to climate impacts."
This canary is no longer just singing -- it's screaming.