The growing financial burden of natural disasters is exposing the limitations of national insurance systems across Europe, fueling calls for a coordinated EU-wide catastrophe coverage scheme. As climate-related risks intensify, experts warn that existing national institutions are struggling to keep pace, leaving vast economic losses uninsured.

According to Morningstar, a leading financial data provider, a pan-European public-private reinsurance scheme could be instrumental in closing the insurance gap while ensuring affordable protection against natural catastrophes. Mario De Cicco, Vice President of Global Insurance & Pension Ratings, emphasized – quoted by Reinsurance News -, that such a system would enhance risk-pooling, providing critical support to both governments and private insurers.

The push for an EU-level insurance framework has gained traction following discussions led by the European Insurance and Occupational Pensions Authority (EIOPA) and the European Central Bank (ECB). Their data highlights a severe insurance gap, with only 20% of economic losses from natural catastrophes covered in the EU—leaving 80% of financial risks unprotected. In some countries, uninsured losses exceed 95% of total disaster-related costs.

The climate crisis is driving both the frequency and intensity of extreme weather events, making coverage even more costly and exacerbating affordability challenges for consumers, businesses, and governments. While some European nations, such as France, Denmark, Belgium etc., have developed national catastrophe insurance programs, these systems remain limited in their ability to comprehensively address cross-border risks. Also, national insurance systems have other limitations, particularly in their ability to cover the full spectrum of natural catastrophe risks comprehensively.

As natural disasters become a pan-European challenge, experts stress that an EU-wide catastrophe insurance scheme is no longer optional but a critical necessity for financial stability and equitable risk-sharing among member states. A broader EU framework could integrate additional risk transfer mechanisms, such as catastrophe bonds, enhancing Europe’s ability to manage the financial impact of increasingly frequent disasters. Additionally, the initiative could expand reinsurance capacity, enabling insurers to absorb greater financial risks and ultimately improving both the availability and affordability of coverage, particularly in high-risk regions.