A proposal published by the European Central Bank (ECB) and the European Insurance and Occupational Pensions Authority (EIOPA) calls for a natural catastrophe insurance system that includes pooling private risks, strengthening disaster risk management, and the use of catastrophe bonds to support catastrophe reinsurance availability for Europe.
It follows a discussion paper from 2023 that called for increased use of catastrophe bonds to support the overall supply of catastrophe insurance across the European Union (EU), as climate change threatened to widen the protection gap.
An ECB executive had also highlighted that deeper catastrophe bond markets could help in tackling the climate insurance protection gap in Europe.
While research reports from the World Bank Group and European Commission called on governments across Europe to utilise more in the way of disaster risk transfer and insurance to reduce the pressure from weather and natural perils on budgets, including the use of catastrophe bonds.
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