Senior insurance industry whistleblowers have warned that climate and environmental risk is increasing at "a dangerous rate", according to a memo published by NGO Inside Track that places fresh pressure on UK hospitality operators reliant on strained food supply lines.

The memo documents how insurance firms are repricing cover, restricting terms (including the removal of wildfire cover from buildings insurance) or pulling out of sectors including agriculture. "As both domestic and commercial property insurance is limited or withdrawn at a significant scale, we foresee an economic risk that could precede a financial crash in the way that the sub-prime mortgage crisis catalysed the global financial crisis," the memo states.

Farmers and supply chain businesses are "set to be disproportionately impacted," it adds, with consequences reaching hospitality kitchens and the operators that depend on them.

What does the warning change for operators?

The practical question for hotel and pub groups is whether property and business interruption premiums keep climbing, and whether climate-linked perils will be excluded from renewals. Underwriting decisions on farms, processors and cold-storage assets feed directly into menu costs and continuity cover, while removal of wildfire cover from buildings insurance hits rural and coastal hospitality sites first.

Why auditors call government plans undercooked

The National Audit Office has concluded that Defra's plans for responding to an event that severely disrupts food supply "lack operational detail and industry involvement." Food is one of 13 sectors designated as Critical National Infrastructure, yet no specific food supply chain assets currently sit in the government's CNI database, because Defra has previously assessed that no individual asset is sufficiently critical.

The NAO also found:

• Defra's food supply chain resilience team grew from 6.5 to 16.5 full-time equivalent staff in May, on an initial 12-month uplift.
• The last government exercise on a catastrophic event that would severely disrupt food supplies was held in 2023.
• Defra has not meaningfully tested the changes made since to address identified limitations.
• Food businesses likely to lead a national response "have not been involved in government exercises," and the state owns almost no food infrastructure to compel resilience investment.

Strategic leadership gap draws fire

Over 180 experts, academics, farmers and community food leaders wrote to Prime Minister Andy Burnham warning the UK is "complacent and unprepared" for coming food emergencies. "The hard truth is that the food system built over recent decades is not fit for today's or tomorrow's challenges," the open letter stated. The group has called for Defra to be renamed the Department for Environment and Food Security.

Tim Lang, professor emeritus of food policy at City St George's and a signatory, said: "We need system shift: grow more food; more regionalism, diversity and storage at multiple levels, not just households; and public engagement in civil food defence. Central government must provide more strategic leadership while encouraging actions at different levels."

Tactical fixes are masking structural risk

Liam McAleese, director of our natural world at the Esmée Fairbairn Foundation, argued that resilience "risks becoming the new greenwash – a reassuring word that allows us to describe short-term fixes as a long-term strategy." Ana Cuddeford of Inside Track told The Small Print podcast: "The industry's greatest power, which is the ability to adapt and to manage disruption, has almost become its greatest weakness." McAleese added: "Diversifying supply chains may buy time" but does not, alone, make the system resilient.

Emily Coon, departing sustainability manager at St Austell Brewery for Fuller's, said climate risk feels abstract at 2°C of warming but tangible when framed as crop failure, water shortages, ingredient price inflation, property damage and rising insurance costs. "When you have those kinds of conversations it is not a sustainability issue anymore, it's a business issue," she said.

The caveat operators should price in

The NAO acknowledged the supply chain maintained overall food availability through Covid-19 and the war in Ukraine. That record can mislead leadership teams into treating systemic shocks as manageable through tactical switching of regions and ingredients. Whether boards accept that warning now, or only after the next repricing cycle, is the operational question for 2026 budgets.

Defra has convened a new food preparedness group of charities, trade bodies and community groups to draft threat response plans; its 12-month staffing uplift expires in May 2026 and the next whole-system stress-test exercise has not been scheduled.