EU to launch climate insurance alliance to address protection gap

The European Union (EU) is to establish a climate insurance alliance aimed at increasing protection against losses caused by extreme weather.

European Commission President Ursula von der Leyen announced the initiative following a summer marked by wildfires, drought, and heatwaves across Europe. EU figures indicate that only around a quarter of climate-related economic losses in the bloc are currently insured.

The alliance will bring together insurers, investors, risk modelling specialists, public authorities, and policyholders to explore ways of increasing insurance uptake and reducing the financial burden of climate-related events.

Potential measures include greater use of group and parametric insurance. Parametric policies provide predetermined payouts when specified conditions – such as rainfall or temperature thresholds – are reached.

“Far too often, national budgets become the insurer of last resort,” von der Leyen said. “We need to take action to close this gap.”

The initiative will form part of wider EU efforts to improve climate preparedness, including a climate resilience strategy due in October and plans to strengthen early warning systems for heatwaves.

Europe’s intensifying wildfire season is also changing how travellers plan holidays, creating new challenges for travel insurers as climate-related disruption becomes an increasingly routine part of summer travel.