The European Commission this week launched a public consultation on the prevention and insurance of natural and man-made disasters. This Green Paper examines the market penetration of insurance in this area throughout the EU; it investigates disaster risk awareness and claims handling and looks at the combination of natural and man-made disasters. Some quantitative figures in the green paper about insurance practices for floods, storms, earthquakes and droughts in the EU countries rely on the JRC's study " Natural Catastrophes: Risk relevance and Insurance Coverage in the EU ".
The JRC study represents the first step for the development of an EU database of harmonised quantitative information on Natural Catastrophes and proposes a methodology to analyse and compare risk and insurance practices across EU MS.
The analysis highlights that the risk for flood, storm and earthquake is heterogeneous among MS. Based on available data, there are cases where natural catastrophes insurance markets do not seem to fully cope with existing risks and penetration rates vary considerably across the EU and depending on the risk.
According to the collected data for floods and earthquakes, penetration rates are high only when coupled with other insurance policies. The insurance market for floods is efficiently developed in Belgium, Ireland, France and the UK, where the insurance is bundled with another base policy, such as fire, household and damages insurance.
Penetration rates for earthquake insurance are high in five countries (Belgium, Ireland, Spain, France and the UK), where it is coupled with other insurance policies. The rate is moderate or very low in many of the countries for which data was collected, especially in those where the risk is more relevant, like Greece and Italy.
The insurance market for storms seems to be the most developed: it shows high penetration in 13 Member States of the 20 for which data was available. For drought, penetration rates seem very low in most cases, but the available information is not sufficient to draw a general conclusion.
The study identifies open issues on the insurance systems in place and provides individual country records, describing insurance practices and corresponding data sources. The exercise clearly demonstrates that there is a need for more and better data on risk and insurance for natural catastrophes and that harmonized definitions should be agreed at EU level to make data comparable.
The objective of the consultation – opened until 30 June 2013 – is to raise awareness and to assess whether action should be taken at EU level to increase insurance coverage and improve the market for disaster insurance. It accompanies the Commission's Communication "An EU strategy on adaptation to climate change."
Another challenge in addressing natural disasters is bridging the gap between scientific and operational organisations and improving the link between scientific advice, early warning and early action decision making. To this end the JRC has collaborated with the UK Met Office: the main recommendations of a jointly organised seminar in November 2012 were to explore the value of a partnership at European level and to provide guidance to support disaster risk reduction activities within Horizon 2020.
Participants from 14 Member States, the Commission and international organisations (UN, OECD, the World bank, WHO, WFP, Red Cross, WMO, ECMWF and Eurocontrol) suggested that the JRC could take the lead to examine the goals, the structure and the mandate of these recommendations.