Europe’s top supervisory body for the insurance sector on Thursday launched a new climate disaster data initiative that will help supervisors, the industry and policy makers better understand insurance exposures and losses from climate and nature related catastrophes.
It’s called the Catastrophe Data Hub. The European Insurance and Occupational Pensions Authority, known as Eiopa, said the hub is an open-source collection of catastrophe risk data at European level.
The hub swiftly makes clear how climate-related disasters are insured, and what the actual losses are of catastrophes in recent years. For example, Flood perils, per 2020, were insurance in Europe for some 25 trillion euro. The hub also shows that the 2013 floods in Germany and eastern Europe, the costliest floods since 1980s, incurred insured losses of some 1,407 billion euro. Data on the 2021 floods in northwest Europe were not yet available.
Eiopa said that as global temperatures rise and the nature of threats evolves, such losses are expected to increase in the coming years. It also heightens the likelihood of the already substantial insurance protection gap expanding further, Eiopa said. Eiopa, together with the ECB, already warned in April that this insurance gap needs to be bridged. Businesses and households are not sufficiently insured against climate-related disasters, raising the risk of financial instability and economic crises.
Open access to data
“Open access to data and models are necessary to improve sustainability risk assessment,” said Eiopa chair Petra Hielkema at the body’s sustainable finance conference. “As a centre of excellence in data and cat modelling, Eiopa will continue to support the European supervisors and insurers with expertise, studies, tools and data. This will enable better assessment and supervision of catastrophe risks.’
Eiopa’s Catastrophe Data Hub is publicly accessible online and provides European-wide data on insured losses for three different events: the 2017 wildfire in Portugal, the June 2013 floods and the 2020 windstorm Ciara, as well as exposure data for natural catastrophes for windstorm and flood.
The data will serve as a source of information for supervisors, the insurance sector and policy-makers that need to consider prevention measures.
At the conference, Hielkema drew attention to a new Eiopa consultation on the prudential treatment of sustainability risks, a paper that she consider as a “milestone”. The consultation runs until 22 March next year.
Eiopa also is further developing its approach on nature-related risks for pension funds and insurance companies. “As significant institutional investors, pension funds have the power to further the green transition,” she said.