Insurance and climate: a reform redefining the rules for businesses

Insurance and climate: a necessary reform… but one that profoundly transforms the rules of the game

 On April 8, the National Assembly adopted on first reading a bill[1] aimed at structuring climate change adaptation policy and evolving insurance mechanisms.

 This text marks an important step. Some see it as concrete and long-awaited progress. Others view it as a deeper transformation of the system, which remains incomplete.

 For businesses and economic actors, the challenge is clear: to understand what is really changing and what this implies starting today.

Necessary progress to adapt the system

 The text introduces several structural developments that move towards a better consideration of climate risk.

 First, it provides a legal foundation for adaptation policy by enshrining the National Climate Change Adaptation Plan (PNACC) and the Reference Warming Trajectory (TRACC) into law. Climate evolution thus becomes an explicit parameter in planning and development decisions.

 Next, it puts an end to a major inconsistency: like-for-like rebuilding after a disaster. From now on, assets must be rebuilt in a more resilient manner, with the possibility of accessing higher compensation to finance these works. The goal is clear: to avoid recreating the vulnerabilities that led to the loss.

 Finally, the text introduces adjustments to the financing of the insurance system, notably through the possibility of modulating premiums for certain exposed or high-value assets. The aim is to strengthen the sustainability of the scheme while preserving access to insurance.

 These developments represent genuine progress, even if the TRACC is not the most suitable framework for companies with global subsidiaries and suppliers, for which the IPCC's SSP scenarios remain the only ones that allow a global approach to adaptation strategy.

 A deeper transformation than it appears

 Beyond these advances, the text introduces a more structural, often less visible change: insurance no longer merely covers risk, but also behavior in the face of risk.

After a loss, the insured is encouraged, or even forced, to adapt their property. In the event of a refusal, they face lasting penalties, even if they switch insurers.

 This shift is major. It means that the system is beginning to integrate not only risk exposure, but also the capacity to adapt to it.

Toward increasing asset differentiation

 This evolution paves the way for a broader market transformation.

Gradually, assets will be differentiated more according to:

• their level of exposure

• their vulnerability

• their adaptive capacity

 In concrete terms, this translates into:

• differentiated premium levels

• variable insurability conditions

• potential impacts on asset values

 In other words, climate is now part of economic value.

 An increased responsibility for economic actors

 The text largely relies on individual levers: adaptation of buildings, of value chains, policyholder behavior, post-loss decisions.

Conversely, structural levers—land use planning, infrastructure, land policies—remain little utilized at this stage.

 The result is a gradual shift of responsibility toward economic actors themselves. This development is structural: adaptation becomes an operational responsibility, and no longer solely a public one.

 Implementation that remains uncertain

The adopted text is a first step. It still needs to be examined by the Senate, then specified by implementing decrees.  Yet, it is these decrees that will determine the real impact of the reform.

 Several key questions remain open:

• What does the concept of “resilient rebuilding” cover precisely?

• How will the levels of deductibles and surcharges be defined?

• What will be the arrangements for information sharing between actors? Insurers? Banks? Notaries? Real estate agents?

 Furthermore, the question of overall funding for prevention remains unresolved. The text introduces incentives, but does not fully resolve existing imbalances. The framework is set, but the rules of the game remain to be defined.

What this changes for businesses

 Beyond the regulatory framework, this text confirms an underlying trend that Tardigrade AI has been observing for several years: climate risk is becoming a direct economic topic.

 Concretely:

• the cost of insurance will increasingly reflect the actual risk, integrating exposure, vulnerability, and the level of adaptation

• risk pooling will decrease in favor of a differentiated approach

• certain assets could become difficult to insure

• adaptation will become a lever for economic performance

 Failing to anticipate means facing rising costs with no ability to act.

 Turning a constraint into a strategic lever

In this new context, one question becomes central: how can these developments be anticipated to turn them into an advantage rather than an endured risk?

The most forward-looking organizations are already taking a proactive approach. They:

• finely analyze their climate exposure

• quantify financial impacts

• prioritize their adaptation investments

• integrate climate into their strategic decisions

 They do not suffer the risk: they manage it.

The role of Tardigrade AI

At Tardigrade AI, we support businesses and local authorities through this transformation. Our approach consists of translating physical climate risks—precipitation intensity, heatwaves, extreme winds—into concrete financial impacts. In other words, we estimate the actual risk faced by the business or community.

We thereby make it possible to:

• precisely understand exposure to risks

• quantify short- and long-term financial impacts

• prioritize adaptation actions

• guide investments (CAPEX) based on risk

Our mission: transform climate risk into informed, measurable, and value-creating decisions.

Conclusion

This reform marks an important step forward. It provides necessary answers, but above all, it initiates a deeper transformation: one of a system in which climate becomes a structural economic variable.

The real question is no longer whether the system will evolve, but how fast. The best time to prepare for it was yesterday. The second best time is now!

[1] https://www.assemblee-nationale.fr/dyn/17/textes/l17t0266_texte-adopte-seance