EU Watchdogs Urge Insurers to Build Out Catastrophe-Bond Market

Insurers should consider expanding their use of catastrophe bonds as a way to support the market for climate insurance, European bank and pension regulators warned.

Increased use of such bonds would support the market and pass on part of the risk to capital market investors, the European Central Bank and the European Insurance and Occupational Pensions Authority said in a report on Monday. The current lack of coverage poses a threat to economic and financial stability, the ECB and EIOPA said.

For now, only a quarter of EU climate-related catastrophe losses are insured, a figure that’s likely to fall, according ...