February 21, 2024

As we reported in April, the European Central Bank (ECB) and the European Insurance and Occupational Pensions Authority (EIOPA) emphasized the importance of using catastrophe bonds to support the provision of catastrophe insurance and reinsurance across the region, while also proposing the issuance of Home is closer.

European CommissionWhile traditional insurance and reinsurance solutions and public-private partnership measures are also seen as key, the ECB and EIA say greater use of cat bonds could help bring climate and cat risk together into capital markets​​ market, thereby benefiting EU countries.

The ECB and EIOPA, in a call for comments on their discussion paper, also indicated that policy measures could be taken, including providing incentives that we have seen elsewhere, such as the ILS subsidy scheme seen elsewhere, and more efficient, faster regulatory process.

We understand that feedback has been submitted asking these European regulators to push forward with such proposals, as market participants in Europe see the substantial benefit of a more efficient catastrophe bond issuance jurisdiction within the EU.

Meanwhile, grant funding to facilitate catastrophe bond issuance to cover climate-related weather risk is also seen as crucial to parts of Europe, with lobby groups pushing the agencies to consider more formal proposals to follow up on its Discuss papers, be told.

So far, within the EU, Ireland and France appear to be the only regulatory regimes with the ability to issue insurance-linked securities (ILS), although the UK, despite leaving the EU, remains part of Europe and also has an ILS regime.

However, Ireland seems likely to be the beneficiary of any immediate EU push to increase the efficiency or reduce the cost of cat bond issuance, as existing and established cat bond jurisdictions would be the most immediate to provide cat bond issuance. disaster bond jurisdictions, this makes sense. New proposals to sponsors.

It will be interesting to see what, if any, results from the European cat bond negotiation process.

Historically, there has been much discussion about the potential of cat bonds to help fill the underwriting gap for property risks and certain specialty lines within the EU.

The EU has discussed multiple uses for cat bonds and ILS, including oil spill risks and nuclear disasters in the past, so any move to use cat bonds in a cheaper and more efficient way may in time open up new avenues.

Suitable for print, PDF and email