Earth, water, air and fire – the risk frontiers for the London market

The London specialty market must be prepared for an eclectic mix of environmental and natural catastrophe risks, as the world’s changing climate and modernising energy infrastructure bring fresh challenges – and opportunities – to the forefront.

This is according to a new report from Hiscox’s London market business titled Hiscox Elements, released 13 November 2025, which sought to investigate how risk profiles might develop across certain elements of the natural catastrophe sector – namely earth, water, air and fire.

According to James Tanner, major property line underwriter at Hiscox London Market, insurance capacity for earthquake risk would need to grow rapidly as cities continue to expand in areas of high seismic activity, though advancements in building codes and predictive analytics will help to quantify the risk more effectively.

Meanwhile, flood risk was forecasted to be one of the major climate-related risks of the future. The UK, for example, is set to see up to 25% of its housing stock at risk from flooding from rivers, the sea or surface water by the 2050s.

Atmospheric changes related to the climate offer both risks and rewards to insurers. While hurricanes and storms are increasingly common and increasingly expensive, the rise of wind power as a clean-energy generator – second only to solar in terms of growth rate – will open new markets.

Fire risks grow

With regularity and severity increasing across both Europe and the US, wildfire risk has been at the forefront of many Lloyd’s operators’ minds. Indeed, the Los Angeles wildfires in January 2025 caused somewhere in the region of $28bn (£21bn) to $54bn (£49bn) in property damages alone.

Likewise, the growth of electric vehicles has introduced a new battery-fire risk to the market, with the UK’s Fire Industry Association reporting 200 injuries and 10 fatalities from lithium-ion battery-related fires since 2020.

Kate Markham, chief executive at Hiscox London market, said: “Hiscox Elements sets out to explore and examine the many threats and opportunities connected to the classical elements of earth, water, air and fire.

“The report reveals that, as the risk profile of the elements shifts, particularly due to factors like changing weather patterns, so does the insurance response.”