The European Central Bank (ECB) alongside a macro-prudential oversight body it operates, the European Systemic Risk Board (ESRB), has called for greater use of catastrophe bonds to address the insurance protection gap and mitigate catastrophe risks from climate change in the European Union.
The transfer of catastrophe risks and physical climate change risk drivers to the capital markets is seen as a prudent step to both support the broadening of the insurance and reinsurance market’s capacity to respond to climate change, and move risk away from public and private balance-sheets.
Insurance coverage and adaptation measures are both seen as critical levers for the European Union nations, as they respond to growing climate risk exposures and the impacts of severe weather and natural disasters across the region.
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