Short of the apocalypse, there is nothing so calamitous that capitalists cannot find a way to make money from it. While some capitalists own the fossil fuel industries that pollute the atmosphere with CO2, causing climate change that threatens the lives of billions, others are flocking to invest in financial instruments devised to reap rich profits from the very chaos the system creates. As property becomes increasingly uninsurable against the risk of extreme weather events, and as the masses face immiseration or worse, wealthy buyers of ‘catastrophe bonds’ are enjoying a windfall.
The terrifying consequences of climate change are seen across the globe:
- England and Wales experienced yet more sweltering heatwaves in June and July of 2025. 600 people are believed to have died in the June heatwave; this adds to more than 10,000 deaths caused by heatwaves in 2020-2024 according to the UK Health Security Agency.
- In the US, deluges have caught populations almost totally unprepared. July storms caused record rainfall in New Jersey and New York, killing four people. From 4 July-14 July unprecedented flooding occurred in Kerr County, Texas. 150 people were confirmed dead by 15 July, including 37 children.
- In China, punishing heat and flooding afflicted the country in July. According to the news agency Reuters, ‘In Zhaotong more than 7,000 people were evacuated and five were reported missing amid heavy rains…One county recorded 227.8 mm of rainfall within 24 hours, the highest local single-day total since records began in 1958.’
These weather changes fit an alarming pattern. Scientists at Britain’s Met Office recently reported that the number of days with temperatures 5C above the average for 1961-1990 had doubled in the last decade. Rainfall in Britain has also become more intense, with the number of months where counties receive twice the average rainfall rising 50% in two decades.
A 79-day heatwave in China in 2022, the worst for 60 years, claimed the lives of more than 50,000 people according to a study by the Lancet. Another 74-day heatwave followed in 2024, the second most intense since 1961, while there was unprecedented extreme precipitation from 9 June to 2 July 2024.
A US National Climate Assessment in January 2025 showed that heavy rain is increasingly concentrated in the form of intense single-day storms: ‘Nine of the top 10 years for extreme one-day precipitation events have occurred since 1995… The percentage of land area experiencing much greater than normal yearly precipitation totals increased between 1895 and 2023’ (EPA.gov, updated 15 January 2025). Meanwhile, the Trump administration denies any link between fossil fuels and climate change. The 2025 federal budget included cuts to the Building Resilient Infrastructure and Communities programme and terminated the Flood Mitigation Assistance programme, which together provided over $3bn in funding for flood planning and defence (World Socialist Website, 15 July 2025).
Extreme weather events are making insurance of properties increasingly unviable as floods, hurricanes and wildfires encroach on regions that were once climatically calmer. They can result in enormous unpredictable pay-outs for insurance companies which may not be fully covered by the premiums paid by all the policy holders. Globally, insurers have paid out more than $100bn in natural catastrophe losses every year so far since 2020, with the reinsurer Swiss Re predicting this could reach $300bn in a peak year.
Insurance is essential to the functioning of the capitalist system. Besides taking on debt, the traditional option for insurance companies facing extreme events is to rely on reinsurance. A reinsurer insures an insurance company against the risk of large pay-outs resulting from catastrophes. In the event of such a catastrophe, the insurance company claims back from the reinsurer the costs of the large pay-out. The price of reinsurance has increased as natural disasters have become more frequent, and the price of assets has increased. This has made reinsurance unaffordable in some regions while increasing the profits of reinsurers (Financial Times, 8 August 2024). The world’s largest reinsurer Munich Re reported a record €5.7bn of post-tax profits in 2024, beating targets four years in a row.
A particularly morbid symptom of the crisis is the rise of catastrophe bonds. First issued in the 1990s, these offload the risk to insurers of paying out for extreme weather events, such as floods and wildfires, onto bondholders. They are a form of security issued by insurers, reinsurers and governments to supplement the inadequate income from premiums or other sources. The bonds are issued on the open market – bondholders receive income like with investments or loans. If there is a pay-out due to a catastrophe within the 3-5 year maturity period, however, bondholders may lose the money they advanced.
In the midst of deepening capitalist crisis, these assets have become a safe haven. Compared to other high-yield bonds, catastrophe bonds are less correlated with broader financial conditions. This makes them highly attractive to investors in conditions of economic uncertainty and falling yields on corporate bonds. The cost of pay-outs on catastrophe bonds has increased to around 3% annually as climate disasters have multiplied, but this remains well below the annual yields of around 13% in USD. According to one investment consultant quoted by the Financial Times, catastrophe bonds are ‘the juicy part of the fixed income spectrum at the moment’.
The short-term soundness of buying catastrophe bonds for individual investors belies the rotten implications of the whole business. There has been a dramatic increase in the issuance of the bonds since 2000. So far in 2025, over $18bn of bonds have been issued, breaking 2024’s record ($17.7bn) in just seven months. The global catastrophe bond market has grown from less than $10bn in 2005 to $52bn in 2025. The hundreds of billions gambled annually in insurance and bonds, while similar sums are urgently needed for mitigation and adaptation to climate change, exemplifies capitalism’s utterly irrational approach to dealing with its own deadly effluence. The whole ghoulish casino must be demolished and replaced with a planned system of socialist production.
Will Jones
Fight Racism! Fight Imperialism! 307, August/September 2025
