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The calls follow the publication last month of a European Commission green paper on the insurance of natural and man-made disasters. The Commission is seeking to increase insurance coverage of catastrophes, after it was found that the number of disasters in Europe have increased since 1980. The Commission is considering making insurance cover mandatory as well as looking at measures to improve risk assessment.
Catastrophe risk experts say that steps to improve the industry's ability to quantify risk more effectively are necessary if the insurance industry is to take on more risk. Better quality data with more standardisation are seen as a crucial if the industry is to understand and model catastrophe risk better, experts say.
"Improved risk modelling will no doubt attract insurers and capital, as they then stand a better chance of making an informed decision about covering known risks, and put in place profitable insurance products", says Hélène Galy, managing director, head of proprietary modelling at global insurance broker Willis Research Group in London.
Modelling the risk of natural disasters is a complex task, relying heavily on historical loss data. Insurers argue that European policy-makers need to foster an environment of free and ready access to risk data within and between member states.
Annemarie Bos, a policy adviser at trade body Insurance Europe, based in Brussels, says that government officials should cooperate with insurers to publish relevant risk data without fear of data protection violations. The EU should promote investment in forward-looking, multidimensional risk models that consider socio-economic, geological and hydrological data, she adds.
The green paper correctly recognises that a one-size-fits-all approach to European disaster management would not address the challenges of modelling risks locally and globally, says David Bresch, head of sustainability at Swiss Re.
"The European region is affected by many different hazards, but there are different cultures to deal with them as well as different systems in place. The paper raises the right question: what level of harmonisation is feasible and what level of joint intervention is desirable?" Bresch says.
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