Eiopa: US exit from Paris Agreement raises nat cat insurability issues

By Rebecca Delaney

May 8 - (The Insurer) - The withdrawal of the U.S. from climate-related multilateral agreements may increase insurability challenges for the industry as losses from climate-driven natural catastrophes increase over the next 12 months, the European Insurance and Occupational Pensions Authority (Eiopa) has warned.

Eiopa's latest insurance risk dashboard highlighted that while ESG-related risks for the industry currently remain stable at a medium level, the outlook for the next 12 months indicates increased risk.

Indicators for physical climate risks show notably higher exposure to windstorm risk compared to flood risk, with Eiopa adding that evolving dynamics in climate agreements are making it more challenging to mitigate risks, as well as to ensure consistent progress toward long-term sustainability goals.

"The withdrawal of the U.S. from the World Health Organisation and from the agreements on climate undermine the achievements of future objectives in those fields, opening the door to more extreme pandemics and natural catastrophes," said Eiopa.

"Larger losses stemming from these events will make their insurability not economically sustainable by the industry reducing the offer and increasing its cost."

The dashboard also showed that median exposure to climate-relevant assets among Eiopa's sample slightly decreased in April 2025 from 3.4% to 3.1% of total assets.

In November 2024, Eiopa called for additional capital charges for European insurers’ transition-exposed assets to help better align capital requirements with insurers’ actual risk exposures.

Eiopa argued that additional capital charges would ensure that European insurers set aside enough capital to withstand potential losses from investments in assets with high transition risks.

For stocks, Eiopa proposed raising capital requirements by up to 17% in additive terms in addition to the current capital charge, which would lead to a moderate increase in insurers’ capital requirements.

For bonds, Eiopa recommended a capital charge of up to 40% in multiplicative terms in addition to existing capital requirements, rather than applying rating downgrades to fossil fuel-related bonds.