A report published today has laid out recommendations on how to reduce the protection gap caused by climate change - the gulf between how much is lost and how much is insured. The final report is the outcome of the Climate Resilience Dialogue - an initiative first launched by the European Commission in 2021 which gathered a broad range of stakeholders including the insurance industry.
Acknowledging that natural catastrophes caused by climate change are becoming increasingly intense and frequent, the report notes that today only around 25% of climate change-related losses are covered by insurance across Europe, albeit with big differences between countries.
Nicolas Jeanmart head of personal & general insurance from Insurance Europe, who acted as co-rapporteur of the report, said, ‘Besides being a huge challenge for our societies, climate change is also threatening the insurance industry’s critical role in providing protection. If the industry is to continue to offer broad, affordable insurance, we must both radically cut greenhouse gas emissions and strengthen resilience in our communities. Bringing together (re)insurers, consumers, businesses, and policymakers together, to listen, learn and offer concrete solutions, is one of the ways forward’
The report’s key proposals to overcome the climate protection gap include:
1/ Increase risk awareness – develop accessible tools for consumers and offer more information specific to the needs of each locality;
2/ Exploit the opportunities of data to ensure proper risk assessments;
3/ Advise and incentivize policyholders to implement adaptation measures;
4/ Share responsibility and involve a range of stakeholders to build resilience;
5/ Consider higher levels of mutualisation, public-private partnerships and/or subsidies to address the twin challenge of affordability and insurability.
In its position paper, Insurance Matters, Insurance Europe also recently released its demands for the European Union, reiterating the industry’s role in tackling climate change.