of northern Italy had never seen anything like the thunderstorm that mauled their region last summer. Hailstones as big as 19cm across pummelled Milan, Parma, Turin and Venice. Windows were broken, solar panels smashed, tiles cracked and cars dented. The episode cost the insurance industry $4.8bn, making it the most expensive natural disaster in the world from July to September .
The impending bill is so huge, in fact, that it will have grim implications not just for personal prosperity, but also for the financial system. Property is the world’s most important asset class, accounting for an estimated two-thirds of global wealth. Homes are at the heart of many of the world’s most important financial markets, with mortgages serving as collateral in money markets and shoring up the balance-sheets of banks.
The risks are not spread evenly, however. Research conducted by the Bank of England in 2022 found that just 10% of postcode districts, each roughly the size of a small town, would account for 45% of the mortgages that would be impaired if average global temperatures reached 3.3°C above pre-industrial levels, largely because of the increased risk of flooding in those places.
Yet Miami’s property market is booming. A forest of apartment buildings is rising around the city. Over the past five years house prices have leapt by 79%, according to the Case-Shiller index. If the market is sending any signal about the risks of climate change to property, it is to relax.