The European Insurance and Occupational Pensions Authority (EIOPA) launched today a public consultation regarding the prudential treatment of adaptation measures within the Solvency II framework, aimed to assess the interplay between risk mitigation and capital requirements for natural catastrophe (NatCat) insurance.
Insurance coverage plays a critical role in protecting households, businesses and governments from the impacts of natural-related disasters. However, in Europe there is a significant natural catastrophe insurance protection gap, with only around a quarter of losses from extreme events being insured in the past, as shown in EIOPA’s dashboard on insurance protection gap for natural catastrophes.
With climate change expected to increase the frequency and intensity of climate-related perils, adaptation measures, such as water-resistant floorings or reinforced walls for flood protection, can help reduce policyholders’ risk exposures and insured losses. At the same time, such measures can be key in maintaining the future supply of non-life insurance products covering climate-related hazards at affordable prices and thus help reduce future losses in Europe.
In its previous work, EIOPA highlighted the key role that insurance undertakings play in the adaptation of the society and real economy to climate change, by introducing the concept of “impact underwriting”. It encourages insurers to use their data, expertise, and risk assessment capabilities to incentivise policyholders to adopt adaptation measures.
While progress in the sector can be seen, EIOPA notes that the EU insurance market is still in the early stages of integrating micro-adaptation measures into insurance products.
The objective of this consultation paper is to assess if a dedicated treatment under Solvency II is justified to better reflect adaptation measures in the NatCat standard formula module beyond the regular calibration of its parameters.
Key areas of focus include:
- risk sensitivity: assessing if the current framework acts as an obstacle to "impact underwriting."
- materiality: evaluating the impact of adaptation measures from a Standard Formula perspective.
- proportionality: ensuring any new prudential treatments strike a balance between risk sensitivity and complexity.
Consultation process
The consultation paper is structured to guide stakeholders through the prudential framework's sensitivity, materiality assessments, and potential options for dedicated treatment, including a quantitative assessment of standard formula parameters.
EIOPA invites stakeholders to provide their feedback on the consultation paper by responding to the questions via the online survey no later than 17th of April 2026. All responses will be published on EIOPA’s website unless otherwise requested.
Details
- Publication date
- 4 February 2026