Rising Self-Insurance Highlights Growing Climate Risk on Corporate Balance Sheets

According to a recent LinkedIn post from First Street, the company’s latest risk assessment of more than 5,600 SEC filers suggests a rising trend toward internalizing climate-related losses. The post indicates that about one in four companies explicitly report some form of self-insurance for operational and disaster risks, reflecting pressure from commercial insurance coverage and cost constraints.

The LinkedIn post highlights survey findings that 44% of firms view commercial coverage as too expensive to secure full protection, while roughly 30% of public companies make no disclosure on insurance in their filings. Asset-intensive sectors such as Consumer Cyclical, Utilities, and Industrials appear most exposed, with around 40% of companies in each sector disclosing self-insurance structures in their 10-Ks.

According to the post, this shift implies a growing share of weather-related losses will be borne through retained risk, internal reserves, and higher earnings volatility rather than being transferred to insurers. For investors, the analysis suggests that physical climate risk is increasingly functioning as an operating cost and capital planning variable, influencing reserve policies, self-insured retentions, and the capacity for growth investment.

The post further argues that understanding the location and exposure of assets, and the share of revenue tied to those locations, is becoming central to evaluating this internalized risk. For asset-intensive and climate-exposed industries in particular, these dynamics could have implications for margins, cash flow stability, and the risk-return profile of both corporates and insurance providers over time.