Risk transfer and disaster risk response are important elements of strategies on adaptation to climate change and disaster risk reduction. Climate related damage is expected to increase with climate change, due to increasing numbers of extreme-weather events that will also be increasingly powerful (storms, floods, heat waves, droughts). In terms of financial and economic damages, this will increase the burden on governments and citizens. The adaptive capacity of cities is an important factor in preventing damages. The insurance and public sector at municipal and city levels are not structurally sharing their knowledge of disaster loss data in local risk assessment and identification of adaptation options, which may lead to sub-optimal adaptation practice, leading in turn to higher damages, higher recovery costs and higher premiums for insurers.
NOTE: Bottlenecks addressed: 4,5,33 (see the Annex F on the Draft Action Plan)
The EU Adaptation Strategy (2013) includes Action 8: Promote insurance and other financial products for resilient investment and business decisions. It promotes the use of products and services by insurance and financial markets. The ‘adaptation preparedness scoreboard’ that was developed as a tool in the EU Adaptation Strategy is also addressing the topic where one of the indicators (8e) states ‘adaptation is mainstreamed in insurance or alternative policy instruments, where relevant, to provide incentives for investments in risk prevention’. Insurance aimed towards natural and man-made disasters was addressed by the Commission in a Green Paper adopted along with the EU Adaptation Strategy. This focuses on a number of questions related to the adequacy and availability of appropriate disaster insurance. Its main objective was to raise awareness and to assess whether action at EU level could be appropriate or warranted to improve the market for disaster insurance in the EU. As a response to the public consultation, sharing of data was one of the main broadly supported desires by both the public and the insurance sector respondents. A recent study was conducted by DG CLIMA on ‘Insurance of weather and climate related disaster risk: Inventory and analysis of mechanisms to support damage prevention in the EU’. It delivered important new insights and analysis in the field as well as policy recommendations, specifically on shared vulnerability assessment, transparency in public-private cooperation and who would cover which share of the risk and proposing a number of measures such as the use of community rating systems and allowing cities to pool their insurance. However, important gaps exist, specifically in terms of concrete next steps and a critical mass of pilot cases where sharing of risk data and loss data has been applied to improve local, urban or regional resilience.
This action will be a specific roll-out of action 8 of the EU Adaptation Strategy, serving the policy objectives of the Green Paper on Insurance of Man-Made and Natural Disasters and following a number of key recommendations made in the DG CLIMA study on insurance, disaster risk and climate change. It will lead to insights into structural data sharing to improve adaptation action, risk prevention, risk transfer and disaster risk management, and it will provide experience and potential evidence of how integrating insurance in adaptation and disaster risk management can improve climate resilience, lower climate risk and adjust the insurance business model to the consequences of climate change.
- An outreach to municipal, regional and insurance stakeholders should be conducted before the start of this action.
- The action is proposed to be implemented after 2019 once the next Commission will assess the need for the revision of the Adaptation Strategy and will consider including any new or reinforced action. Analysis of 20 regional and urban adaptation plans to see which actions and investments are being planned to prevent or reduce the negative impacts of climate change;
- Integration of the economic development plans for the same regions and cities into the analysis under step a;
- Mapping of the extent to which insurance loss-data of climate-related extreme weather events have been used in those plans
- Improvement of the plans selected in step a, based on insurance data
Funding Sources and Needs: The resources assigned for the implementation of this initiative would come from existing EU funding instruments such as LIFE.
Implementation Risks: Failing to engage the insurance sector and getting access to the required information.
Responsible Institution: DG Clima
Contributing Institutions: Municipalities, regional authorities, insurance and re-insurance companies and EIOPA (European Insurance and Occupational Pensions Authority)
- 12.2019 communication established and a cooperation initiative in place
- 06.2020 incorporation of the gathered information in some already ongoing urban municipal/regional plans
Indicator of Completion: Number of urban and regional plans that integrate climate and risk related information originating the insurance sector.
- Draft Action R1: Revision of urban development and planning regulation tools, focusing on national, regional and local climate adaptation actions
- Draft Action R2: Further involvement of national municipality associations and Covenant of Mayors as key facilitators and supporters of local authorities
- Draft Action F1: Guidelines and toolkits for adaptation economic analysis
- Draft Action F2: Recommendations for the Ops of the ERDF in order to improve access for municipalities
- Draft Action F3: A new LIFE for urban adaptation projects
- Draft Action F4: Further support for the drafting of local adaptation plans
- Draft Action K1: Improving data accessibility for EU Municipalities in the framework of COPERNICUS
- Draft Action K2: Enhancing the urban content of Climate-ADAPT
- Draft Action K3: Political training academy on climate adaptation
- Draft Action K4: Enhancing citizen and stakeholder involvement at regional and local levels for climate adaptation agendas
- Draft Action K5: Promote open access on insurance data for climate risk management