Europe is facing increasing climate risks as extreme weather events have tripled in the past four years. Earth has warmed twice since 1980, causing more frequent floods, heavy rains, heat waves and forest fires. These events have significant impacts on the local economy, environment and public health. Climate change has a significant economic impact on Europe. In 2023 alone, bad weather will cause economic losses of 270 billion euros. Despite the severity of these diseases, only about 25% were covered by insurance, showing a significant protection gap. This deficit undermines economic stability and increases the financial burden on governments. Insurance is important in reducing the financial consequences of weather disasters, as it protects funds and encourages risk reduction activities. However, the availability of insurance is decreasing and costs are increasing, increasing the protection gap and intensifying financial and systemic risks. To meet these challenges, the European Insurance and Occupational Pensions Authority (EIOPA) supports the investigation of new public-private partnerships at EU and national level. These relationships can promote risk prevention and adaptation, making insurance more affordable and accessible.
Cooperation between the insurance industry, regulators, supervision and authorities is essential to increase flexibility and reduce the protection gap. EIOPA has also become a leader in disaster modeling and data sharing, providing valuable tools to better assess climate risks. The Climate Resilience Dialogue emphasizes the need to continue to measure the gaps in insurance protection and proposes the creation of an EU-wide data center on natural disasters. The center will have better access to data for effective risk assessment and can inform decision making by decision makers, insurance companies and other stakeholders. Informing consumers about climate risks and promoting insurance take-up is important. EIOPA is developing strategies to encourage greater insurance penetration, such as offering financial incentives for risk reduction measures. An effective strategy is the “cost effect”, where insurance agents encourage consumers to reduce their risk, which benefits both consumers and insurance companies. This approach aligns the interests of insurers and policyholders by promoting effective risk management. As Europe faces increasing climate risks, innovative insurance models and strong public-private partnerships are essential. By improving risk understanding, data sharing and strengthening cooperation between actors, Europe can increase its resilience and protect its citizens against climate-related disasters . This action is necessary to ensure economic stability and reduce the social and economic consequences of climate change across the country.