EU insurance, pensions and financial supervisors have urged creation of a joint risk‑sharing pool sized between €10bn‑€65bn. The facility would tap the bloc’s AAA credit rating to issue cheap debt, backstop insurers against earthquakes, floods, heatwaves, wildfires and storms, and narrow the persistent protection gap that left many losses uninsured.

Recent disasters illustrate the shortfall. In Valencia’s 2024 floods, insurers covered only €4.5bn of the €11bn total loss; the 2021 Ahr valley floods saw €13bn insured out of €51bn. The European Insurance and Occupational Pensions Authority together with the European Stability Mechanism argues that pooling risk across member states could cut required capital by up to 67 %.

The pool would supply insurers with a stable capital source, prompting them to expand coverage in high‑risk regions. By reducing reliance on ad‑hoc government aid, the mechanism also cushions national budgets during extreme events. This predictability could attract private investors seeking long‑term returns tied to climate resilience.

An EU‑wide backstop would be fiscally neutral, issuing loans rather than grants, and would lower reinsurance costs by providing predictable funding. Investors could see demand for sovereign bonds linked to the pool rise, while national schemes in Spain, France and Romania would act as complements, not replacements. The proposal sets a clear path to shore up resilience against climate‑driven losses.