European Council: climate change may push the continent toward a potential insurance crisis.

16 January 2025 — Daniela GHETU
The European Council’s recently released report Forward look2025 – Time for Leadership highlights how climate change is profoundly impacting the insurance industry, where rising costs and widening coverage gaps risk pushing the continent toward a potential insurance crisis.

“In some regions the threat of assets becoming uninsurable looms, leaving governments and citizens increasingly vulnerable to financial risks,” reads the report.

Key points include:

  1. Rising Costs of Natural Disasters: Climate-related extremes have cost the European Union EUR 738 billion over the past four decades, with EUR 162 billion incurred between 2021 and 2023 alone. Insurers face significant challenges in covering these escalating losses.
  2. Insurance Crisis Risks: Increasing costs and widening coverage gaps are straining Europe’s insurance markets, with some regions facing the possibility of assets becoming uninsurable, leaving governments and individuals financially exposed.
  3. Heightened Climate Tipping Points: Events like Greenland ice sheet destabilization and extreme European weather underscore the urgency for climate adaptation strategies alongside mitigation efforts.
  4. Global Collaboration Needed: While the EU contributes only 6.7% of global emissions, collective international action is critical. The EU’s role as a climate leader is challenged by uneven global commitments, particularly with the U.S. potentially rolling back environmental regulations.
  5. Adaptation as a Priority: The insurance industry must shift from reactive crisis management to proactive resilience-building, with initiatives like the upcoming COP30 expected to drive national adaptation plans.
The report underscores the pivotal role of insurers in addressing climate risks while calling for systemic shifts to protect economies and communities from growing environmental threats.

Read the full report Forward look2025 – Time for Leadership.

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