ECB and EIOPA push for increased uptake of climate catastrophe insurance in the EU to address growing risks

The European Central Bank (ECB) and the European Insurance and Occupational Pensions Authority (EIOPA) have released a joint discussion paper calling for increased uptake of climate catastrophe insurance in the European Union (EU). Currently, only around one-quarter of all climate-related catastrophe losses in the EU are insured, which poses risks to the economy and financial stability. The paper suggests policy options to promote climate catastrophe insurance, such as designing policies to encourage households and firms to reduce risk, increasing the use of catastrophe bonds, setting up public-private partnerships and backstops, and complementing national-level insurance schemes with an EU-wide public scheme. The ECB and EIOPA will collect feedback on the policy options and discuss them in a workshop in May 2023.