ENHANCE response to the Commission Green Paper on disaster insurance

The European Commission’s Green Paper on the insurance of natural and man-made disasters, COM(2013) 213, opened a public consultation in 2013. The ENHANCE consortium submitted a formal response, reported on 2 October 2013, with a later edit on 16 October 2014.

The response started from diversity. Insurance systems in Europe range from voluntary markets to arrangements with mandatory elements, and the consortium named Spain, Belgium and France as examples of the second kind. It then took up two questions the Green Paper had raised: how insurance relates to risk reduction, and how far cover creates moral hazard by weakening the incentive to protect property.

On the first, the consortium’s position was conditional. Insurance can support physical risk reduction if the scheme is designed for it, but the evidence base on economic instruments of this kind remained thin in 2013.

The response also looked past insurance:

• taxes, payments for ecosystem services and water pricing were flagged as further economic instruments;
• the roles of public and private actors needed clarifying;
• new partnerships were needed beyond the familiar pairing of insurers and government.

The consortium published its full response as a PDF; the Green Paper itself is available on EUR-Lex. ENHANCE returned to the theme in later work, notably the working paper on novel and improved insurance instruments. The national systems the response mentioned are compared on the schemes pages.