ESG & Investing
ECB Pitches Plan to Boost Insurance Coverage for Climate Losses
- Central bank and insurance authority warn of ‘protection gap’
- New proposal is linked to increasing flood losses in Europe
European Central Bank headquarters in Frankfurt, Germany.
Photographer: Alex Kraus/BloombergThis article is for subscribers only.
The European Central Bank and the region’s insurance authority proposed a two-pronged approach to increase insurance coverage for floods, storms and other weather disasters that are increasingly being fueled by climate change.
One part of the plan is a voluntary public-private reinsurance mechanism that would pool private risks across the EU to help backstop weather-related losses. The second pillar would be to create a mandatory European Union fund to pay reconstruction costs when high-loss natural disasters occur.