European insurance is in a shake-up amid climate change, EU supervisor EIOPA head says

As the climate changes, the European Union's insurance industry is also facing a major shake-up. Insurance will continue to work well if consumers and government players do campaigns together and make investments to prepare for natural disasters, and more clarity is needed about an array of EU-level legislation changes to be implemented – European Insurance and Occupational Pensions Authority (EIOPA) Chairperson Petra Hielkema told Világgazdaság. The recent storm Boris and the heavy floods accompanying it added to warning signs on a European level that climate change justifies an ongoing shake-up in the insurance industry –  European Insurance and Occupational Pensions Authority (EIOPA) Petra Hielkema told Világgazdaság on the sidelines of a consumer protection conference of EU supervisory authorities and the Hungarian central bank (MNB) in Budapest. All affected parties including local government need to step up campaigns to reduce risks, investments launched for protection, and an array of ongoing legislative changes discussed, clarified an implemented, along with guarantees that insurance and pension money channelled into the green transition remains safe. All affected sides in the European insurance industry need changes to address a huge increase in damages caused by climate change – European Insurance and Occupational Pensions Authority (EIOPA) Chair Petra Hielkema warned Fotó: EIOPA photo galleryCentral Europe suffered heavy flooding in the past weeks. Are the insurers and insurer regulation in Europe prepared for even worse things to come in the field of natural disasters?We see a significant increase in the damages in Europe from what we call NatCat disasters: storms, floods, drought, earthquakes and forest fires. The costs are going up tremendously. If you look at the 2010-2019 period, on an EU level you see it at 15,9 billion euros on average per year. In the last three years, it was 50 billion. And if you look at all the events in 2024, including the floods after storm Boris –  I don't expect that number to go down this year. So we have a problem. If you look at a longer period, since 1980 till now, we see 900 billion in damages. And of that 20 percent is in the last three years. Can the insurance industry cope with this at the moment? Yes. Do we have to be careful with the prices? We are worried about the price of insurance going forward, and this is a concern. Why? Because damages are increasing tremendously and insurers need to price the risk accordingly. If the risk goes up, the price goes up. This raises all kinds of questions of insurability.  For instance, can people who currently have insurance obtain it in the future?In our natural catastrophe dashboard, it’s clear that 75 percent of all damages are uninsured, which highlights an even greater issue and it is putting a burden on governments who need to step in when a natural catastrophes happen. We have just seen that Ursula von der Leyen has promised 10 billion euros to support Central and Eastern Europe to deal with the damages. What we say at EIOPA, and we very much have this as a priority: we need to take a different perspective on how we deal with these events. Not only insurers and consumers, but also governments: we need to accept as a group that this will happen. Our green agenda to cut emissions should reduce the impact.