The Association of Public Insurers (VöV) welcomes the opportunity to comment on the European Commission’s consultation regarding the European framework for climate resilience. As the second-largest German primary insurer with deep regional roots, the group is firmly committed to a more sustainable economy. The public insurers are signatories to the "Principles for Responsible Investment" (PRI) and integrate environmental, social, and governance (ESG) criteria into their business decisions. As the market leader in private residential property insurance, holding a market share of approximately 28 percent, the public insurers and their policyholders are directly impacted by the physical consequences of climate change. The Association views the consequences of climate change as serious financial risks that directly affect claims expenses, premium calculations, and long-term insurability. Regarding general positions on sustainability and sustainable finance, the Association refers to its previously submitted statements. With respect to the specific questions of this consultation, the public insurers provide the following comments and refer to the feedback from the German Insurance Association (GDV) for further aspects.
While the insurance industry takes responsibility for covering risks and providing risk transparency, the public sector is responsible for governing the fundamental framework. Genuine resilience can only be achieved if the levers of the EU, national governments, municipalities, and private actors, ranging from regional spatial planning to individual property protection, are precisely synchronized. A one-sided reliance on insurance solutions without state investment in protective infrastructure would raise questions about long-term insurability. A lack of resilience leads not only to rising claims payments but also to declining investment security, higher capital costs, and long-term productivity losses. Climate resilience is, therefore, an integral component of European competitiveness and economic sovereignty.
Prevention as an Integral Framework for Action
A central pillar of this strategy must be the consistent integration of conceptual climate resilience into all relevant economic and policy sectors. The construction sector requires critical attention, as decisions made here often cement exposure to natural hazards for decades to come. It is therefore essential to anchor climate resilience directly in the planning phase through mandatory site assessments and minimum structural standards, such as heavy rain prevention. Furthermore, spatial planning and land use must be regulated in order to prevent construction in flood-prone areas, thereby avoiding unsustainable future costs and rising insurance premiums.
In parallel, the resilience of critical infrastructure must be strengthened through a consistent "resilience-by-design" approach to minimize systemic cascade effects during extreme weather events. Critical infrastructure represents a vital public good, as it is a prerequisite for economic and social stability and security of supply. For these adaptation measures to be effective on a broad scale, national adaptation plans must be designed as genuine investment and financing roadmaps. These plans should follow a clear prioritization and a resilient cost-benefit logic.
Governance, Data, Market Incentives and Financial Stability
In this context, climate resilience should be integrated into the allocation of EU public funding, while administrative hurdles and fragmented responsibilities must be dismantled to accelerate the approval processes for prevention projects. A key factor for effective climate preparedness is the improvement of data policy and risk transparency through the establishment of natural hazard portals. Such a portal, utilizing open data and uniform standards, would enable an objective assessment of individual risk levels.
A mandatory natural hazard certificate for every building could sharpen risk awareness and create market-based incentives for individual preparedness. This is also necessary to overcome the so-called Samaritan’s dilemma, where the political expectation of ad-hoc state aid in the event of a disaster weakens the incentive for private precaution. A clearly defined and predictable architecture for state support is required to avoid moral hazard and to sustainably strengthen both individual preparedness and insurance coverage.
Climate resilience is not merely an environmental or actuarial issue; it directly affects financial stability, the functioning of capital markets, and social cohesion. Low-income households are disproportionately affected by climate-related damages. Prevention is, therefore, also a measure to safeguard social stability.
Insurer Obligation Instead of Mandatory Insurance
The German debate on natural hazard mitigation is currently overly narrow, focusing primarily on questions of insurance density. This limited focus comes at the expense of necessary investments in active climate adaptation and effective prevention measures. VöV rejects the mandatory natural hazard insurance currently being discussed in Germany; such a mandate would be constitutionally problematic and practically difficult to enforce. Furthermore, it would significantly reduce the incentives for active loss prevention at both the individual and collective levels.
Instead, the preferred model is an insurer obligation with an opt-out option. By automatically including natural hazard coverage in residential property insurance, this model achieves maximum insurance density while preserving individual freedom of choice. To ensure that natural hazard insurance remains affordable and available nationwide, the insurance industry has developed the 'Elementar Re model. In the event of very rare, extreme loss events, a state-backed stop-loss mechanism would kick in as a last resort.
Overall, the VöV advocates for insurance coverage as a necessary supplement to, but never a substitute for, risk reduction. By linking prevention, transparency, and risk-adequate financing, the goal is to secure the economic stability of society under changing climatic conditions. For a detailed presentation of these views, the Association refers to the following position paper.
You can download the detailed statement including specific responses to selected questions here.
