Insurance Europe publishes response to ECB-EIOPA paper on climate protection gap

28 June 2023

The insurance industry welcomes the April 2023 discussion paper of the European Central Bank/European Insurance and Occupational Pensions Authority on policy options to tackle the widening climate insurance protection gap.

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Insurance Europe welcomes the discussion paper released by the European Central Bank and the European Insurance and Occupational Pensions Authority (EIOPA) on policy options to reduce the climate protection gap.
Over the past few years, climate change has exacerbated the severity and intensity of disasters from natural hazard events, leading to distressing loss of life and significant economic costs across Europe and worldwide. These climate-change effects, coupled with rapid urbanisation and increasing asset values, result in an increase in economic losses, a substantial portion of which are not insured, even though the situation varies sometimes significantly between member states. With the climate expected to continue changing for the foreseeable future, addressing this climate protection gap is more crucial than ever before.
The insurance sector plays a vital role as a tool for climate adaptation and effective disaster risk management, aiding individual policyholders and communities to recover more swiftly, as well as for managing risk integrally. Thus, Insurance Europe appreciates the recognition of the unique role of insurance and the benefits of high insurance penetration, but also the acknowledgement that the private insurance sector alone cannot handle climate change-related risks. Indeed, a protection gap cannot be solved solely by private insurance, and insurance only works as a capstone of good risk management.
Insurance Europe also appreciates the paper’s presentation of several potential solutions for reducing the climate protection gap. With a view to contributing constructively to this important effort, we provide below our input on the solutions proposed in the discussion paper.
We note as well that the publication of the paper coincides with the European Commission’s ongoing “Climate Resilience Dialogue”, which brings together a broad range of stakeholders interested in addressing the climate protection gap, and in which EIOPA is also involved. The Climate Resilience Dialogue shares the goal of identifying ways to enhance climate resilience and so reduce the protection gap. Against this background, and given the importance of avoiding duplication of effort, we believe it would be highly beneficial to coordinate future discussions on this issue within the Climate Resilience Dialogue. We look forward to continuing to engage through this important dialogue....

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