EU Regulators Propose €10bn+ Disaster Fund to Bridge Insurance Gap

European insurance regulators are advocating for the creation of a multi-billion euro disaster fund, exceeding €10bn, to address the widening insurance protection gap. The proposal stems from concerns that only a small fraction of economic losses from natural catastrophes and systemic risks are currently covered by insurance. By establishing this fund, regulators aim to mitigate fiscal instability and provide a safety net for underinsured events that threaten the broader economy. Major industry players, including Allianz, AXA, and Munich Re, are closely monitoring the development as it could reshape the regulatory landscape for private insurers. While the initiative seeks to stabilize the sector, the fiscal burden of funding such a mechanism creates a complex outlook for the STOXX Europe 600 Insurance Index. This move highlights the growing urgency within the EU to address climate-related financial risks and enhance collective resilience.