‍The Alarming Reality: Insurance Markets Are Near a Breaking Point

Climate-driven disasters are no longer hypothetical “worst-case scenarios.” They’re recurring business disruptors — and insurers know it.

In her recent article, “Insurers Plan for Extreme Events,” Harvard Law professor Susan Crawford warns that global insurance carriers are actively preparing for large-scale, multi-system failures that could threaten their very solvency.

From wildfires and floods to cyberattacks and infrastructure breakdowns, today’s risks are intertwined and compounding. The result is a landscape where even well-capitalized insurers are rethinking what’s insurable — and what isn’t.

U.S. Companies Are Already Feeling the Pressure

For American businesses, this shift translates into higher premiums, reduced coverage limits, and more exclusions — particularly in regions prone to catastrophic loss.
Commercial property and liability renewals have become increasingly unpredictable. In states like California and Florida, insurers have withdrawn entirely from some lines, citing untenable loss ratios.

The message is unmistakable: traditional insurance markets can no longer be relied upon as a sole risk management tool.  Smart businesses know this.

As systemic risks multiply — from climate change to cyber vulnerabilities — many companies are left exposed to massive uninsured losses that could threaten liquidity, operations, and long-term viability.

Captive Insurance: Taking Control of the Uncontrollable

In this environment, captive insurance companies are emerging as a vital tool for resilience and financial control.

A captive allows an organization to form its own insurance company, enabling it to retain predictable risks, manage volatility, and access reinsurance markets directly.

Here’s how captives help businesses navigate the new era of uncertainty:

• Customized Coverage — Design policies that address the specific risks your company faces, including those excluded by traditional insurers and fill the gaps and exclusions for your traditional policies.
• Cost Stability — Smooth out premium volatility by funding your own losses over time.
• Capital Efficiency — Build reserves in a tax-efficient structure to support long-term risk financing.
• Reinsurance Access — Tap into global reinsurance markets for catastrophic protection that commercial carriers may no longer offer.
• Strategic Risk Retention — Retain what you can manage; transfer what you can’t — on your terms.

Captive insurance turns risk into a managed asset, not an external cost. For many U.S. firms, it’s becoming an essential pillar of their enterprise risk management strategy.

A Call to Action for Business Leaders

Crawford’s article asks a sobering question: if insurers are planning for “end-of-solvency” scenarios, why aren’t governments — or corporations — doing the same?

The answer lies in mindset. Insurers view the world through the lens of risk modeling and capital preparedness. Business leaders must adopt the same discipline — recognizing that resilience is now a competitive advantage.

A captive insurance structure is not just about saving money; it’s about ensuring survival when the unimaginable happens.
The companies that plan like insurers will be the ones that endure.

Final Thoughts

The future of risk is no longer predictable — but it is plannable. By building proactive risk strategies, forming captives, and investing in resilience, U.S. companies can protect themselves from the cascading failures that threaten insurers, governments, and markets alike.

Source: Susan Crawford, “Insurers Plan for Extreme Events” (Substack, November 2025)

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