The report presents the first results based on a large data collection exercise from the industry. It focuses on property, content and business interruption insurance against windstorm, wildfire, river flood and coastal flood risks. These risks have been identified as the most relevant and potentially most disruptive for the European property insurance business under a current and forward-looking perspective.
The report aims to provide an initial assessment of the European insurance sector’s exposure to climate-related hazards and inform future work in this relatively new field. The results indicate that European groups and solo undertakings included in the sample have been historically well placed to handle claims stemming from three major European natural catastrophes analysed in the report. However, it is important to note that the insurance sector’s ability to continue to offer financial protection against the consequences of such events relies on their ability to measure the likely impact of climate change and adapt their business strategies.
Participants surveyed for the paper said they expect all property-related lines of business to be impacted by physical climate change risks. There is an emerging consensus among them that premiums are likely to increase and that adaptation and mitigation measures will play a crucial role in reducing risk levels in the future.
Finally, the report’s findings show that there is still work to do for the insurance industry to prepare for climate-related changes. EIOPA will continue its work with national competent authorities and the industry to raise awareness and contribute to the sector’s preparation for the effects of climate change.
Background
This paper is part of EIOPA’s broader sustainability agenda to integrate environmental, social and governance risk assessment in the regulatory and supervisory framework. In particular, this report is a follow-up on the sensitivity analysis of climate-change related transition risks in the investment portfolio of European insurers published in 2020.