🌍 Addressing the insurance protection gap for natural catastrophes in Europe: a joint approach Today, together with the European Insurance and Occupational Pensions Authority (EIOPA), we published a paper proposing an EU-level approach designed to mitigate the economic impact of natural catastrophes. This initiative is our response to the increasing frequency and severity of natural disasters driven by climate change, which are expected to widen the existing insurance protection gap. The proposed EU-level framework builds on existing national and EU structures, and consists of two complementary pillars: 1️⃣ An EU public-private reinsurance scheme. This would increase insurance coverage by pooling private risks across the EU, funded by risk-based premiums from (re)insurers and national insurance schemes. By taking advantage of economies of scale, this scheme would diversify high-risk coverage at European level, making insurance against natural catastrophes more accessible and affordable. 2️⃣ An EU fund for public disaster financing. This would strengthen public disaster risk management and support the rebuilding of infrastructure after disasters. Crucially, it would incentivise proactive risk mitigation measures, making Europe more prepared and resilient. As ECB Vice-President Luis de Guindos highlighted, this two-pillar approach could be key to reducing the macroeconomic and financial stability risks associated with natural catastrophes. The first pillar sets out a structured path to incentivise private insurance coverage, while the second would provide financial support to Member States in times of need, subject to concrete and pre-agreed risk mitigation measures. Read the paper https://lnkd.in/dBbuRP4m
The proposed EU level 2 pillars are probably the best answer to climate risk which insurance institutions may be unwilling to take given the binary nature and inability to predict at present. However CAT bonds used in the US to hedge such risk may not be as attractive to European investors. So the proposal merits serious consideration. Very interesting proposal indeed and one hopes this will be considered and implemented swiftly. That seems to be the problem at EU level - decisions to implementation!
In the context of the escalating homeless displaced, the advisory support of the UN HCR would probably be more advantageous. Given that climate change and it's very tangible consequences have little regard for national economies or their insurance models, more universal strategies will need to be advanced.
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4d#resetECB♻️ #ZeroCredibility Failing on it's actual mandate, the ECB is fearmongering about their woke climate agenda, which they have ⚠️NO MANDATE⚠️ for! As the result, growing borrowing costs will only perpetuate the stagflationary trajectory of the Eurozone and ever growing proportion of 'shadow banking' will decrease the transparency and resilience of the financial industry. ➡️ As U.S. FED chairman J.Powell poignantly stated: "Climate policy is for elected officials [...] We are not, and will not be, a climate policymaker". Noone(!) of the ECB's technocrats has been ever(!) democratically elected! ➡️ Politisation and ideological weaponization of the ECB under Lagarde had negative consequences for the ECB's neutrality and credibility - as result rendering it incapable to ensure it's single mandate of price stability and turning this institution into monetary incinerator🖨💶🔥 of purchasing power for millions of Europeans - both domestically and internationally (see weakness of the € versus US$). ➡️ Unsurprisingly, even "among ECB staff, almost 60 per cent of those surveyed by Ipso said they had low or no trust at all in Lagarde and the executive board, which was up from just over 40 per cent a year ago" (Financial Times, 2024).