Why insurers are quietly preparing for geoengineering fallout

Geoengineering – the deliberate, large-scale manipulation of the Earth’s climate to counteract global warming – mostly exists in computer models, academic journals, and policy debates. Despite its speculative nature, it has become increasingly relevant to the insurance and reinsurance world. For insurers, even distant, high-impact risks can no longer be ignored—because being caught off guard by such risks is how markets get blindsided.

The concept isn’t new. Proposals range from spraying reflective aerosols into the upper atmosphere to bounce sunlight back into space, to fertilizing the oceans to stimulate carbon-absorbing plankton blooms, to building massive arrays of mirrors in orbit. In scientific shorthand, these fall into two main buckets: solar radiation management (SRM) and carbon dioxide removal (CDR).

Advocates argue that geoengineering may be a last-ditch option if global efforts to reduce emissions fail to keep temperatures in check. Critics warn that such interventions could trigger unpredictable, even catastrophic, side effects – shifting rainfall patterns, causing regional droughts, or disrupting monsoons that billions rely on for food. Those kinds of “unintended consequences” are the bread and butter of insurance risk analysis.

In the insurance space, no one is rushing to write a “geoengineering liability” policy. But the industry’s largest players are in the business of thinking several moves ahead.

Geoengineering 'isn’t science fiction anymore'

“Geoengineering isn’t science fiction anymore,” said Galen. M. Hair, founder and owner of Insurance Claim HQ, a property-casualty insurance law firm based in Louisiana. “It’s the kind of ‘what if' that keeps insurance executives up at night. We’re talking about deliberately tinkering with the planet’s thermostat —blocking sunlight, brightening clouds, pulling carbon from the sky —on a scale big enough to shift weather patterns. The technology is still mostly in the lab, but the potential fallout is real enough that the insurance world has started quietly war-gaming the possibilities.”

Reinsurers like Lloyd’s of London, Swiss Re, and Munich Re have a history of running scenarios for events that haven’t yet occurred at scale – from cyber pandemics to abrupt climate shocks.

Lloyd’s has been the most public about it, although when contacted for this story, it declined comment and referred calls to Kita, a Lloyd’s partner or coverholder, that writes carbon purchase protection insurance. Kita did not respond.

Through its long-running Emerging Risks program and its more recent Futureset initiative, the market has examined geoengineering in the context of systemic climate risk. As far back as 2008, Lloyd’s warned that “the risks attached to geo-engineering… are huge,” and questioned whether such activities could be insurable at all. Futureset’s scenario-based work, often conducted in collaboration with partners such as the Cambridge Centre for Risk Studies, is designed to help market participants stress-test their portfolios against shocks that could ripple across borders and industries – exactly the kind of profile that geoengineering would have.

Swiss Re, through its annual SONAR Emerging Risks reports, has also touched on the idea, usually under broader headings such as “climate intervention” or “systemic climate risk.” These reports don’t make underwriting calls, but they flag where the company sees knowledge gaps, legal uncertainties, and potential loss triggers worth monitoring.

Munich Re’s Geo Risks Research group is primarily focused on natural hazards, but its discussions of abrupt climate change and human-triggered weather alterations often read like thinly veiled geoengineering scenarios.

Why spend time on a risk that’s still hypothetical? Because if geoengineering ever moves from policy papers to pilot projects – and the science and politics are inching in that direction – insurers will be on the hook for figuring out who pays when something goes wrong.

The 'biggest risk shuffle in human history'

“Any move to re-engineer the climate could be the biggest risk shuffle in human history,” says Hair. “A project meant to cool one region could trigger drought in another. A plan to calm hurricanes could spark new storm tracks somewhere else entirely. That means winners and losers in the risk game – fast. And when those losers are holding insurance policies, the financial shock waves hit hard.”

The U.S. National Academies published a governance roadmap for solar radiation modification in 2021. A 2023 White House report laid out research priorities and called for international engagement on the subject. Those signals matter to insurers. They inform the market that geoengineering is a topic that national governments are beginning to treat as a real, albeit long-term, policy option.

From there, the liability questions cascade: What courts have jurisdiction over a project that alters the global atmosphere? Are the harms “accidental” or “expected,” and thus excluded under most general liability policies? Would insurers demand specialized wordings or carve-outs before covering any related activity?

And beyond direct liability, there’s the knock-on risk. Imagine a “termination shock” scenario, in which a geoengineering program that’s been masking warming for decades is suddenly halted – perhaps due to political upheaval – unleashing rapid temperature spikes. That kind of abrupt shift would roil property, crop, health, and supply chain lines all at once.

These kinds of scenarios strike fear and loathing in the hearts of environmentalists, some of whom are already gearing up for major opposition.

“Even if [geoengineering] was possible to use and helped reduce global temperatures, the best argument against geoengineering is the significant ethical, ecological, and risk uncertainties it brings with it,” said Aidan Charron, associate director of Global EARTHDAY.ORG. “It would make the companies and governments that wielded this power like gods, forcing other nations to bow down. It would impose changes on their climate and weather patterns with no consideration of how it might impact their ecology and needs.”

Impossible to predict all potential outcomes

Charron said it is impossible to predict all the potential outcomes geoengineering might trigger.

“Aside from the ones we want, and much like genetically modified food, once we release it into the world, it cannot be contained,” he said.

For now, insurers aren’t publishing glossy “Geoengineering Risk Outlooks” – at least not with that title on the cover. The topic tends to be embedded in broader climate and sustainability work, sometimes under the euphemism of “novel climate interventions.” The Geneva Association, a global insurance think tank, has explored governance and liability frameworks that would apply directly if such interventions were implemented. Large brokers, such as Marsh McLennan, Aon, and WTW, have referenced geoengineering in their climate liability white papers.

The lack of fanfare is partly a strategic move. Until there’s a real project to price, the industry’s energy is better spent quietly mapping the landscape: What science exists, what governance structures might emerge, and where the coverage landmines lie.

Given the scale of climate change, it is unlikely that geoengineering will remain hypothetical forever. As global temperatures climb, policymakers may find technological options more attractive. For the insurance industry, anticipating geoengineering risks is not just about the odds of implementation but about preparing so the market is not caught flat-footed if speculative risks quickly become real.

Geoengineering may be speculative, but the insurance industry knows how quickly speculation can become reality. Those who anticipate and prepare will be ready to respond—at the right price—when the time comes.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].