Petra Hielkema, chair of the European Union's insurance regulator, has expressed the urgent need for protective measures against climate risks.
This call to action comes as Europe faces escalating economic damages from natural disasters, which are heightening concerns over the potential for regions to become uninsurable.
As the leader of the European Insurance and Occupational Pensions Authority (EIOPA), Hielkema pointed to a consistent increase in losses from natural events such as floods and wildfires.
She outlined necessary actions for insurance companies, member states, and the broader community, including strengthening building regulations, establishing national and EU-wide risk-sharing schemes, and leveraging reinsurance markets more effectively.
“All actors need to move,” she said in an interview with the Financial Times.
Hielkema's cautionary statements align with the rising frequency and severity of extreme weather events due to climate change, which are driving up insurance costs and stoking fears of an insurability crisis. This trend has led some major home insurers to cease new business in areas like California following severe weather-related losses.
Highlighting the financial impact, Hielkema noted that the EU endured over €50 billion in economic losses from natural disasters in both 2021 and 2022—more than triple the annual average of the previous decade.
Despite these staggering figures, only about a quarter of these losses are covered by insurance, revealing a significant protection gap.
The EIOPA chair also discussed the initial reactions from insurers who, years ago, foresaw the need to adjust their strategies either by increasing premiums substantially or excluding certain high-risk areas altogether.
She also criticized the industry's inclination to simply exclude high-risk areas from coverage as an “easy solution,” warning that such actions could ultimately erode public trust and the industry's foundational purpose.
“If you do that, you will, in the end, lose trust and lose your reason to be there,” Hielkema explained.
Addressing the response from governments, Hielkema observed a growing realization that relying solely on public spending to manage disaster responses might not be the most effective approach. She reported an increasing openness to dialogue and the development of public-private partnerships.
Such initiatives typically involve governments sharing disaster-related losses with insurers or creating pooled risk mechanisms. These measures are part of broader efforts to make insurance more affordable and accessible, while addressing the challenges posed by climate change.
Reinsurers also “need to feel that it is not just about selling insurance and making a profit. It’s about responsibility as part of society,” Hielkema said.
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