Kate Abnett writes on the Reuters website that Europe is beginning to confront the financial consequences of climate change, not simply the physical ones. With only about a quarter of climate-related economic losses insured, governments increasingly risk becoming the insurer of last resort.
EU to launch climate insurance scheme after summer of extreme weather
The European Union will create a “climate insurance alliance” to increase cover for extreme weather events, European Commission President Ursula von der Leyen said on Wednesday, as the bloc emerges from a summer of drought, wildfires and heatwaves.
Climate change has made Europe the world’s fastest-warming continent, heating up at twice the global average.
This year’s wildfire season was one of Europe’s worst on record, and a succession of heatwaves killed dozens, disrupted power supplies, reduced productivity and shut schools.
According to EU figures, only a quarter of the climate-related economic losses in the bloc are insured. Its new scheme would bring together insurers, investors, risk modellers, public authorities and insurance takers to work on increasing insurance uptake.
“Far too often, national budgets become the insurer of last resort. We need to take action to close this gap,” von der Leyen said in a speech to the European Parliament.
The alliance will identify and promote instruments that could reduce risk — such as group insurance or parametric insurance, under which payouts are triggered automatically when predefined thresholds such as rainfall levels or temperatures are breached.
While the EU has an ambitious policy framework to reduce the greenhouse gas emissions that cause climate change, it has been slow to prepare for the impact of global warming.
The EU’s independent climate advisers said in February that Europe was underinvesting in climate adaptation, and urged action including better planning to avoid building houses in flood-exposed areas and designing cities to help people stay cool during heatwaves.
“We need to step up dramatically on preparedness,” von der Leyen said.
She also promised other proposals. A “climate resilience” strategy, due in October, on how to manage climate risks in 100 vulnerable European territories. A heatwave plan will aim to improve early warning systems, and an EU water plan will work to increase drought risk management.
Brussels has also asked senior firefighters to make proposals to better manage wildfires, including for the EU to form its own firefighting fleet.
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