The Commission today unveiled a new climate resilience framework and says a Climate Insurance Alliance is in development, but Finance Watch and environmental groups are pressing Brussels for guaranteed access to basic natural hazard insurance and concrete public-private risk-sharing measures.
The European Commission’s new climate resilience framework has put Europe’s growing exposure to extreme weather higher on the policy agenda, but campaigners warn that it does not yet answer a pressing question: who will insure households and businesses as climate risks rise and coverage becomes harder to obtain?
Finance Watch, World Wildlife Fund (WWF) and ShareAction wrote to Commission President Ursula von der Leyen on Friday, urging Brussels to use its planned Climate Insurance Alliance to take concrete action on the widening insurance protection gap.
Commission’s expected framework
In its latest announcement, the Commission estimated that climate-related economic losses between 2022 and 2025 amounted to approximately €200 billion, equivalent to around €50 billion a year.
It also estimated that adapting Europe’s infrastructure and economy will require about €70 billion in annual investment.
The Commission’s framework seeks to strengthen preparedness, embed resilience across policy areas and support public authorities in managing climate threats. Its proposed law would introduce a common approach to climate-risk assessment and require a single national strategic plan.
The Commission has said the alliance will be developed further and presented separately.
Brussels faces pressure to turn climate warnings into insurance guarantees
The intervention comes as the Commission presents its Climate Resilience Framework, designed to strengthen Europe’s ability to anticipate, prepare for and manage climate risks. The package also includes a proposed Climate Resilience Law intended to improve climate-risk assessments and streamline national planning.
The Commission says it will further develop a European Climate Insurance Alliance, but the initiative is still in preparation and will be presented separately. Its announcement does not yet set out whether the alliance will introduce binding requirements on insurers or establish the public-private financial mechanisms advocated by Finance Watch.
“Recognition of the insurance protection gap is useful, a deliberative forum is not,” said Paul Fox, Senior Research and Advocacy Officer at Finance Watch.
“Action starts with what’s already on the table,” he added.
Fox pointed to proposals from the European Insurance and Occupational Pensions Authority (EIOPA) and the European Central Bank for a layered European system combining national arrangements, an EU reinsurance pool and public disaster financing.
Campaigners warn against a Climate Insurance Alliance without concrete action
Finance Watch wants the Commission to go further, including by recognising natural hazard insurance as a Service of General Economic Interest and establishing national public-private schemes capable of offering coverage across Europe.
The aim is to preserve a role for private insurers while ensuring that households and businesses are not left without basic protection when climate exposure makes some risks less commercially attractive.
“Insurance is essential to a functioning economy, and its withdrawal from exposed regions is becoming a market failure that the EU must address,” Fox said.
He compared universal access to natural hazard insurance with the principle underpinning public postal services: provision should not depend solely on whether serving a particular community is profitable.
“Natural hazard insurance should be guaranteed on the same principle,” he said. “It gives people the security to build their lives and the confidence to invest in the future.”
The campaigners’ warning follows reports of concern within the insurance industry that climate risks may be underestimated and that insurers could pull back from exposed markets. A Bloomberg report published on 13 October highlighted warnings about the prospect of reduced insurance coverage as climate risks grow.
However, as things stand and until more details emerge, it remains unclear whether Brussels will adopt the binding insurance guarantees and risk-sharing arrangements sought by Finance Watch, WWF and ShareAction, or leave the central questions of affordability and access unresolved.
(Sources: European Commission, Finance Watch, Bloomberg)
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