· 2 min read
illuminem summarizes for you the essential news of the day. Read the full piece on Financial Post or enjoy below:
🗞️ Driving the news: Starting January 1, Italian companies must purchase insurance to cover climate risks like floods and landslides, as natural disasters linked to climate change intensify
• Backed by a €5 billion reinsurance fund, the law obligates insurers to provide coverage or face fines
• Concerns remain about fund adequacy and insurers potentially withdrawing from high-risk areas
🔭 The context: Europe faces mounting climate-related economic losses, growing 2.9% annually from 2009 to 2023
• Italy’s insurance-protection gap for natural catastrophes is around 80%, one of the highest in Europe
• Measures like catastrophe bonds and impact underwriting are proposed to mitigate risks and improve resilience
🌍 Why it matters for the planet: The law underscores Europe’s urgency in addressing climate risks and aims to close the insurance gap for businesses, particularly SMEs
• As extreme weather events escalate, accessible coverage is critical for economic stability and sustainability efforts
⏭️ What's next: Policymakers and insurers may need to refine the law to avoid fund overload and ensure widespread availability
• Broader adoption of risk mitigation strategies and financial tools like catastrophe bonds could help manage exposure
💬 One quote: “It’s a critical concern for insurers and policymakers, and if no countermeasures are taken, the insurance-protection gap is expected to widen,” — Petra Hielkema, EIOPA Chair
📈 One stat: Climate losses in Europe surged to €50 billion annually in 2021–2023, up from less than €16 billion during 2010–2019
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