As health workers carried out coronavirus tests in public squares in Washington, DC, in July, work had to be suspended as temperatures in the paved spaces soared to what felt like 110 degrees Fahrenheit (43C).

The heat-wilted city of Phoenix in the US state of Arizona, meanwhile, has already seen planes delayed from taking off when airport temperatures hit 120F (48C). And soaring thermometers in Los Angeles this summer led tens of thousands to lose power for days.

In Greece, rising heat is now “one of our city’s greatest challenges”, Athens Mayor Kostas Bakoyannis told an online event in August.

Longer and hotter heatwaves driven by climate change are becoming an increasingly dangerous – and costly – menace, with sweltering cities often picking up the tab for everything from repairing melted roads to running more cooling centres.

But a new way to cut the financial risks is emerging: heatwave insurance.

Since the 1990s, utility companies in cities like Chicago have used weather derivatives – an early form of heat insurance – to hedge the cost of buying additional power on hot days when electricity demand outstrips supply, said Daniel Osgood of the International Research Institute for Climate and Society (IRI).

Heat has also been an indirect part of “index-based” insurance for poor farmers, which provides automatic payouts for assumed crop losses if, for instance, enough days pass without rain, said Osgood, who has worked on developing such policies.

But a wider range of heat insurance offerings – likely aimed initially at city authorities or similar government buyers around the world – are now being explored as the risks and costs of heatwaves rise, insurance experts said.

Michael Spranger, of the Caribbean Catastrophe Risk Insurance Facility (CCRIF), said insurance cannot fix the problem of heatwaves, which will increase in frequency if