The EC looks to boost insurance penetration
The European Commission has released a consultation on a Green Paper which it hopes will improve disaster insurance take-up in the European Union (EU) following an increase in natural catastrophes.
A study on insurance coverage in the EU revealed that while catastrophe events increased between 1980 and 2011 – with the economic toll of natural disasters in the whole of Europe approaching €445 billion in 2011 – insurance uptake remained low in comparison.
“Natural and man-made catastrophes are on the rise, while the capacity of the insurance sector to insure against them is not fully utilised,” said internal market and services commissioner Michel Barnier.
“European-level solutions to bridge the insurance gap need to be explored, along with common means of prevention and ways of raising awareness among citizens and companies. This Green Paper launches an important debate on the issues and will also allow us to get a more complete overview of the situation in different Member States.”
The paper, which accompanies a communication on the strategy for climate change, aims to promote the use of insurance as a tool for disaster management, which it hopes would also result in a shift towards a culture of disaster risk prevention and mitigation.
It suggests risk pooling, compulsory insurance and reinsurance for member states, parametric index-based weather insurance and other innovative solutions as ways to improve catastrophe coverage.
“Well-designed insurance policies can also work as a market-based instrument to discourage risky behaviour and promote risk awareness and mainstream disaster-proofing in economic and financial decisions,” said Kristalina Georgieva, European commissioner for International Cooperation, Humanitarian Aid and Crisis Response.
Southern and central Europe are seeing more frequent heat waves, forest fires and droughts while heavier precipitation and flooding is projected in northern and north-eastern Europe, with an increased risk of coastal flooding and erosion. A rise in these events is likely to increase the magnitude of disasters, leading to significant economic losses, public health problems and deaths, according to the paper.
