A network of European insurers has called for more high-quality and usable data on climate risks in response to the EU's consultation on plans for a new 'green deal'.
In a new position paper, Insurance Europe explained how the pre-requisite for pricing climate risks is good data on how such risks can materialise and affect the real economy.
Consequently, the group called for a new digital platform for all investors and insurers to gain access to better data, and argued that risk mapping and analysis should also be examined at a local level.
Moreover, Insurance Europe said that coordinated public-private partnerships may be needed for the successful dissemination of coherent, high-quality data on climate change adaptation measures.
“Adaptation guidelines, mainstreaming of adaptation measures and the sharing of information through EU databases can assist member states in developing solutions that work best for their markets and environmental conditions,” the position paper states.
“The EU is in a favourable position to support EU-wide efforts to model physical risks relating to climate, which ought to be accessible on an affordable, digital platform to all investors and insurers – and possibly the whole of society – in order to create a well-informed, level playing field.”
The European Commission unveiled its green deal roadmap to make Europe the world’s first carbon-neutral continent by 2050 at the end of last year, and many believe the COVID-19 pandemic has added urgency to the plans.
Insurance Europe said that new legislation should include enforcement of risk-adverse policies, such as building codes, flood defences and avoidance of construction in high-risk zones.
It also called for an increased supply of sustainable investment assets, which “remains limited”, and a clear link to EU taxonomy to make clear which investments contribute to climate change adaptation.
In addition, the creation of more incentives – such as tax benefits – and the elimination of wrong incentives that favour short-term decision making is necessary, according to the position paper.
The paper adds: “Insurance Europe believes that cooperation between insurers and policymakers is absolutely essential in order to ensure that a holistic approach to adaptation and natural catastrophes in Europe is taken.
“This new strategy should encourage market-driven initiatives and permit risk transfer mechanisms to adapt to the local conditions of the region where risk transfer systems are implemented.”
Author: Chris Seekings
Image credit: Shutterstock
This article was published as part of Predictions, the future-gazing thought leadership sub-brand of The Actuary covering emerging trends within the insurance, finance and actuarial sectors - you can find out more on the Predictions homepage.
