While EIOPA's aim of providing transparent information on natural catastrophe protection gaps is welcome, its proposals require amendments to properly account for individual circumstances across member states. Because this is currently not the case, the dashboard will likely be misleading and not provide a good basis for policy decisions.
EIOPA's proposals also require further amendments to ensure that prevention is adequately reflected in the dashboard. In general, it is important to keep in mind that, while insurers can play a vital role in adaptation and mitigation, insurance cover is simply a way to provide financial compensation for an event and is not a substitute for effective prevention measures being enacted. Maintaining, or indeed improving, the affordability and insurability of insurance against climate and weather-related risks cannot be achieved without adequate prevention measures being taken.
Regarding the methodology used, Insurance Europe commented that there are some aspects of the exposure to hazard risk elements that should be adjusted in order to have more precise and accurate results. For instance, using a 50-year period to calculate earthquake exposure hazard seems insufficient to model this risk.
It is also unclear whether public infrastructure and property owned by the state and municipalities are taken into account. Privately owned property accounts for only part of the losses caused by natural catastrophes, so the level of insurance penetration for privately owned property does not answer the question of how large or small a protection gap is.
Insurance Europe stands ready to work together with EIOPA to make this important project a success.