The European Insurance and Occupational Pensions Authority (EIOPA) has published an Opinion recommending updates to how natural catastrophe (natcat) underwriting risk is reflected in insurers’ Solvency II standard formula calibrations, following a 2023–2024 reassessment. The proposals use updated scientific insights, recent climate data and advanced risk modelling to adjust risk factors for perils such as flood, hail, earthquake and windstorm for certain regions, and to expand the number of countries covered. The package proposes new factors for 24 regions across floods, windstorms, hail, earthquakes and subsidence. Flood receives the broadest update, with three countries’ flood risk factors recalibrated and seven additional countries proposed for inclusion, including Ireland, Luxembourg and Norway. Windstorm risk factors would increase for regions including Iceland and some of France’s overseas territories, while hail risk factors would rise for countries including Germany, Belgium and Luxembourg. Subsidence risk would increase for France, and Belgium would receive a standard formula risk factor for this peril. EIOPA also notes it is monitoring emerging perils, including wildfire, coastal flood and drought, for possible future inclusion. EIOPA has submitted its proposals to the European Commission, which will consider the advice for a potential recalibration of the relevant standard formula parameters. The Opinion follows consultation and is framed by the Solvency II Review requirement for EIOPA to reassess natcat risk parameters at least every five years and recalibrate them where significant discrepancies are identified.
European Insurance and Occupational Pensions Authority 2025-01-30
European Insurance and Occupational Pensions Authority recommends recalibrating Solvency II standard formula natural catastrophe risk factors
The European Insurance and Occupational Pensions Authority (EIOPA) recommends updating Solvency II standard formula calibrations for natural catastrophe underwriting risk, using recent climate data and advanced risk modelling. The proposals introduce new risk factors for perils like flood, hail, earthquake, and windstorm across 24 regions, with significant flood risk updates in ten countries. EIOPA submitted these proposals to the European Commission for consideration, following a reassessment mandated by the Solvency II Review.