The European Union is looking to set up a “climate insurance alliance” to better cover losses resulting from natural disasters that are increasing in frequency and intensity with the advance of global warming.

Bermuda’s largest international re/insurers are viewing the development with “great interest”, John Huff, the chief executive officer of the Association of Bermuda Insurers and Reinsurers, said last night.

The EU initiative was announced by Ursula von der Leyen, President of the European Commission, after what she described as a “summer of truth” for the bloc, when a series of heatwaves triggered wildfires across Europe and key rivers such as the Rhine and Danube fell to record-low levels.

Europe is warming twice as fast as the global average, threatening economic damages that could spiral into hundreds of billions of euros.

“Today, only about 25 per cent of disaster-related losses in Europe are covered by private insurance,” Ms von der Leyen said. “This means that national budgets too often become the insurer of last resort.

“We must take action to close this gap. The commission will therefore establish a climate insurance alliance.”

The ‌alliance will ⁠identify and promote instruments that could reduce risk — such as group insurance or parametric insurance, under which payouts are triggered automatically ​when predefined thresholds such as rainfall levels or temperatures are breached.

Ms von der Leyen warned that Europe had to adapt for hotter conditions. This summer, she said, “there were at least 35,000 additional deaths during heatwaves, with care homes and hospitals overheating to dangerous temperatures — and all this is only a foretaste of what lies ahead.

“These have been the hottest summer months in history — but they are probably the coolest we will experience in the years to come.”

Bermuda’s largest re/insurers do a significant amount of business in the bloc, and compete on a level playing field in the market because of the full regulatory equivalence granted by the European Commission over the past ten years.

“With Bermuda being a global hub of climate risk coverage and expertise, along with being a Solvency II-equivalent jurisdiction — one of only two in the EU — Abir views the statement by the president of the European Commission with great interest,” Mr Huff told The Royal Gazette.

“We look forward to continuing to serve member company customers in Europe while helping to close the protection gap between economic and insured losses.

“Over the past decade, Bermuda’s property and casualty re/insurers have provided over $73.3 billion of support for continental European consumers and communities.”

Ms von der Leyen said the commission will present a new framework for climate resilience next month, identifying 100 of Europe’s most vulnerable territories, and assessing the risks they face.

“This framework will take a whole-of-society approach, extending to the local level, where adaptation matters most. And it will aim to make Europe the leader in climate-adaptation technologies — an enormous emerging market,” Ms von der Leyen added.