Reducing the protection gap – a must for building climate resilience

4 September 2024 — Daniela GHETU
Reducing the protection gap – a must for building climate resilience

The Final Report of the Climate Resilience Dialogue, a special group created by the European Commission in 2021 and co-chaired by DG CLIMA and DG FISMA, laid out recommendations on how to reduce the protection gap caused by climate change.

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.  

“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,” said Nicolas JEANMART, Head of personal & general insurance, Insurance Europe, and co-rapporteur of the report.

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 public-private partnerships and/or subsidies. 

Insurance Europe – the federation of European insurance associations – also recently released its demands for the European Union, reiterating the industry’s role in tackling climate change. In its own paper titled “Insurance matters”, Insurance Europe stressed that “insurers can use their risk management knowledge and expertise to help people, businesses and the public sector reduce risks and exposure, and increase resilience to climate, cyber and other risks. For example, they do so by advising on building planning and safety standards, introducing early warning systems, and using the money paid after damages have occurred to apply “building back better” approaches.”
 

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