Regulators and policymakers must implement a strategic, all-of-society framework to address the root causes of a widening insurance protection gap that threatens global financial stability, according to the World Wide Fund for Nature (WWF).

A new WWF report warns that climate change and nature loss are rapidly undermining the foundations of the insurance system, leaving a growing portion of economic losses uninsured. In 2023 alone, the global cost of disasters reached approximately US$2.3 trillion, or 2% of global GDP, when indirect and ecosystem costs are included.

To preserve insurability, authorities must mandate holistic, forward-looking risk assessments that account for ecosystem tipping points and indirect economic damage. Regulators are urged to integrate nature-based solutions into adaptation planning, as healthy ecosystems serve as vital buffers against extreme weather. The report noted that the risk of a large-scale flooding event can increase by as much as 700% in areas of widespread deforestation, while protecting forests can be up to 25 times more cost-effective for risk mitigation than technical engineering measures.

Conservative estimates of the annual protection gap average US$64 billion in the US and €59 billion in the EU, forcing insurers to hike premiums or withdraw coverage entirely. In 2025, extreme summer events caused an estimated €43 billion in damages across the EU, and experts warn cumulative losses could reach €126 billion by 2029 if action is not taken. Yet, between 1980 and 2023, only 5% to 20% of economic losses from such events were covered by insurance.

Since 2018, over 1.9 million home insurance contracts in the US have been non-renewed, and the average cost of home insurance in the UK rose by 19% between 2023 and 2024. This reduced availability makes mortgages unattainable in high-risk regions and stifles business growth by making commercial credit harder to secure. WWF said the financial burden of uninsured risks would ultimately shift to the state, overstretching public budgets and potentially undermining sovereign creditworthiness.

The report said financial supervisors and central banks adopt a macroprudential approach to address the systemic risks posed by the insurance protection gaps to financial stability, such as spillovers between the insurance and banking sectors.

Recommended measures included using protection gap dashboards and system-wide stress tests that incorporate non-linear shocks and ecosystem tipping points. Supervisors are also urged to mandate science-based transition plans for underwriting portfolios and implement precautionary policy measures that prioritise immediate risk reduction over waiting for perfect data.

Major players are ignoring governance in the race to dominate the AI market, despite greater investor engagement and regulatory scrutiny, according to analysis released ahead of the World Economic Forum.

While 38% of major technology companies publish their ethical AI principles, none disclose the results of human rights impact assessments (HRIA), which the World Benchmarking Alliance (WBA) said exposed “weak accountability” across the sector.

As well as the leading firms in the AI supply chain, major players in industries that rely on digital technology have embedded AI systems throughout their operations over the last 18 months.

“Companies in every layer of the AI value chain have a responsibility to act as stewards of good governance. Any company that develops, procures or deploys these systems can affect risks and rights downstream,” said WBA.

Less than a fifth (19%) of the 200 tech firms analysed had committed to any regional or international AI frameworks or incorporated respect for human rights into their principles.

AI governance standards are still emerging in major jurisdictions, with most frameworks including ethical AI principles among their core expectations, covering firms’ approach to fairness, transparency, accountability, privacy and safety in the technology’s development and deployment.

This week, the UK announced new laws, a regulatory investigation and threatened further sanctions against social media platform X after its Grok AI chatbot was used to create non-consensual intimate images.

In Europe, use of AI is regulated by the EU AI Act, which introduce risk-based rules to ensure AI is trustworthy, safe, and respects fundamental rights.

The WBA study reported a fall in the number of firms issuing ethical AI principles, with just nine publishing these for the first time in 2025, compared with 19 in 2024. Major firms such as ASML, Oracle, SK Hynix and TSMC, and platforms such as Spotify or Uber, still have no public AI principles.

WBA benchmarked the ethical AI practices of 200 large tech firms as part of a wider study of the impact on people and planet of 2,000 global companies.

Noting the lack of information on HRIAs, WBA said firms should “aim high” given the scope for AI to tools to distort public discourse, amplify misinformation, facilitate surveillance and act as vehicles for discrimination and gender-based violence.

“Companies must connect high-level principles to deeper transparency and be willing to disclose HRIA results, which are essential for understanding who is affected and how, and what risks require mitigation,” the WBA report said.

It builds on a recent report by the WBA’s Collective Impact Coalition for Ethical Artificial Intelligence (AI CIC), an group of stakeholders – including 64 investors worth US$11.3 trillion AUM – seeking to ensure that digital technology companies integrate human rights and ethical considerations into AI development, deployment and procurement.

According to the CIC report, more companies are creating governance structures dedicated to ethical AI, but “considerable gaps” remain in transparency around implementation.

While 52 out of 76 companies (68%) had responded to investor outreach by the coalition, major corporate players – notably US-based ‘hyperscalers’ – “elude dialogue”.

Steering committee members of the CIC’s investor group include Candriam, Amundi, Boston Common Asset Management and Fidelity International.

AI has been a high-profile topic in recent years at the World Economic Forum, which holds its annual meetings in Davos next week.

Carbon-intensive corporates are proactively adapting to border carbon adjustment (BCA) mechanisms to maintain global competitiveness in response to European rules entering force January 2026, a study has found.

According to a white paper by Climate Finance Asia and the World Economic Forum, industry giants in the steel, cement, mining, and oil and gas sectors of China, Brazil, India, and South Africa are treating these regulations as a catalyst for technological modernisation.

From January, the EU’s Carbon Border Adjustment Mechanism (CBAM) will charge costs based on the emissions intensity of imported goods. In response, multinationals are implementing internal shadow carbon pricing in capital planning to guide a fundamental shift toward lower-carbon production. Companies are also deploying digital carbon accounting and monitoring systems to ensure supply chain transparency and meet short-term compliance requirements.

To navigate this landscape, the report says firms are seeking to integrate planning for carbon policy administration, achieve compliance with both domestic and international carbon rules, and overhaul operations to decarbonise processes from sourcing to delivery, by engaging stakeholders across the entire value chain.

Many corporations are using early investments in low-carbon technologies to differentiate products and command premium pricing, effectively turning regulatory pressure into a strategic tool for competition. This proactive approach helps reduce exposure to compliance costs and creates long-term resilience as carbon pricing becomes a permanent feature of global trade, the report said. 

Beyond the EU, several other major jurisdictions are exploring or implementing their own BCA mechanisms to prevent carbon leakage and level the playing field for domestic industries. The UK has confirmed it will introduce its own CBAM beginning January, 2027, targeting sectors similar to the EU’s, such as iron, steel, aluminium, and cement. Other nations, including Canada and Australia, are in the early stages of BCA development or have conducted public consultations.