The European Insurance and Occupational Pensions Authority (EIOPA) has recommended updates to how insurers calculate natural catastrophe risks, citing new climate data and advanced risk modeling, an article published on the institution’s website explains.
The proposal, submitted to the European Commission, suggests adjustments to standard formula risk factors for perils such as floods, windstorms, hail, and earthquakes across 24 regions, while also expanding the number of countries included in the framework.
Climate Change Drives Higher Risk Factors
With natural disasters becoming more frequent and severe, EIOPA’s reassessment marks the most significant update to flood risk, adjusting factors for three countries and adding seven new ones—including Ireland, Luxembourg, and Norway—after determining their exposure levels had become material. Windstorm risk factors would increase for regions such as Iceland and parts of France’s overseas territories, while hail risk would rise in Germany, Belgium, and Luxembourg. Subsidence risk would be elevated for France, with Belgium receiving a dedicated factor for the first time.
Expanding the Scope of Climate Perils
Beyond the core five hazards already covered in the standard formula, EIOPA is actively monitoring additional risks—wildfires, coastal flooding, and drought—which could be integrated into future calibrations as climate change alters their frequency and severity.
Regulatory Next Steps
The European Commission will now review EIOPA’s proposals and determine whether to recalibrate Solvency II parameters accordingly. As part of its broader effort to strengthen climate resilience, EIOPA continues to assess insurers’ exposure to physical climate risks and explore solutions to narrow Europe’s insurance protection gap.
For more details, read the full article on EIOPA’s website here.
EIOPA calls for recalibration of Nat Cat risk factors amid climate change threats
30 January 2025 — Daniela GHETU

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