Title: Broadening the scope of risk sharing through a European backstop for natural catastrophes
Authors: Martin Hahn (International Association of Insurance Supervisors), Bernhard Mayr (ESM)
Abstract: An increased frequency and intensity of climate-related natural catastrophes has created significant challenges for both the private and the public sector. Existing risk-sharing approaches are reaching their efficacy limits, pushing governments to take on an increasing share of the burden as private-sector solutions become less affordable or available. This paper outlines how adding a European loan-based backstop facility to the risk-sharing hierarchy can contribute to a more efficient solution and why it may enhance private insurers’ risk-taking capacity. We elaborate on the mechanics of such an approach and show how it could increase private sector insurance capacity without additionally burdening the public.
Disclaimer:
The views expressed in this discussion paper are those of the authors and do not necessarily represent those of the ESM or ESM policy. No responsibility or liability is accepted by the ESM in relation to the accuracy or completeness of the information, including any data sets, presented in this paper.
Source: European Stability Mechanism | Discussion Paper Series | Volume 2024 no. 24 | November 2024 | 24 Pages
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