EU-sponsored conference on "Prevention and Insurance of Natural Catastrophes": a call for increasing public-private partnership

Climate Change Insights 2012-11-08


Co-authored by Nora Wouters and Nicolas Croquet

The European Commission organized on 18 October 2011 a conference in Brussels titled “Prevention and Insurance of Natural Catastrophes”. The conference gathered EU officials, a member of the World Bank, representatives of think tanks and of insurance associations, and finally academics. The conference centered around four themes, namely the general framework for approaching the prevention and insurability of natural catastrophes, ‘insurance availability’, ‘public-private interaction’, and finally ‘natural catastrophes and insurance value chain’. Focus here will be on the third theme. In particular, emphasis will be put on the way in which the EU does and can contribute to promoting and fostering public-private partnership (‘PPP’) in the prevention and insurability of natural catastrophes.

This conference has been a good opportunity to unfold the problems raised by insufficient coordination between the EU institutions and the Member States regarding risk identification and risk assessment, prevention policy as well as civilian intervention and public authorities’ intervention in the treatment of natural catastrophes. There is a spectrum between free market-oriented insurance schemes (e.g., UK and Germany) and solidarity-oriented insurance schemes (e.g., Switzerland and France). There is room for improving the trade-off between these two poles. The conference speakers pointed to an array of ways in which public authorities and insurance companies can join their efforts in developing a comprehensive prevention and insurance policy in the face of such devastating natural catastrophes as tsunamis and earthquakes whilst allowing insurance companies to distinguish themselves on the basis of free market rules. The State can provide tax incentives or direct grants to incentivize the insurance sector in covering large scale natural disasters. It can also act as a re-insurer or as a major shareholder in private insurance companies specialized in natural catastrophes. It can furthermore conclude partnership agreements with insurance companies whereby it agrees to provide a solvency guarantee vis-à-vis their creditors. A common EU-wide framework for the profession of experts in claim evaluation and settlement would also be highly advisable given their crucial role in processing reimbursement claims in the event of natural catastrophes. The EU institutions, Member States’ public authorities and the private insurance sector all need to be able to use reliable statistical data when assessing risk probability associated with natural catastrophes, hence the appropriateness of Commissioner Barnier’s initiative on “statistical mapping”, which would reflect the best statistical practices on risk coverage.

As a matter of general consideration, Emanuela Bellan (Head of Unit, Crisis Management Unit of the Secretariat General, European Commission) conveyed to us that EU’s intervention is the result of a balancing between subsidiarity and solidarity. In the phase preceding a natural disaster, the EU stresses prevention and preparedness whereas in the period postdating a disaster, the EU addresses possible responses and recoveries. EU’s action is always coordinated between its institutions and Member States, in cooperation with relevant partners such as international organizations, NGOS and third countries. She referred to the following as useful tools available at the EU level: the Council conclusions dated 8 and 9 November 2010 on innovative solutions for financing disaster prevention[1], the Cohesion policy funds available to support project[2]; and the Solidarity fund.[3]

Gabriel Bernadino (Chairperson, EIOPA) stressed the fact that data are important in order to increase risk awareness and protect consumers. Based on the EC Joint Research Center’s Report of 18 October 2011, it appears that risks are heterogeneous among EU Member States: national catastrophic insurance markets would not seem to be coping with the same risk in all EU Member States. A dedicated insurance market would be developed for some perils but not for all (e.g., storm). There would be mixed results on how ex-post government intervention is going to influence penetration rates.[4]  

Reinhard Mechler (International Institute for Applied Systems Analysis) referred to the Economic Instrument Adaptation Study of DG CLIMA, which calls for more insurance and economic instruments.[5]


From feeds:

Berkeley Law Library -- Reference & Research Services » Climate Change Insights


international public-private partnership european commission ppp world bank gabriel bernadino international institute for applied systems analysis kristalina georgieva mla michel barnier prevention and insurance of natural catastrophes professor pierre picard reinhard mechler insurance availability natural catastrophes natural catastrophes and insurance value chain public-private interaction


Nicolas Croquet

Date tagged:

11/08/2012, 19:24

Date published:

10/26/2011, 11:21