EU Touts Climate Insurance Pact to Ease Catastrophe Losses

The European Union will set up a “climate insurance alliance” to help pay for losses as global warming increases the frequency and intensity of droughts, floods and wildfires.

European Commission President Ursula von der Leyen announced the initiative as part of her state of the union address Wednesday, saying that only a quarter of catastrophe losses are privately insured, and that the costs therefore fall on national budgets. A climate resilience framework, due next month, will map 100 of the most vulnerable regions in the bloc, she added.

The initiative comes after record-breaking heat waves triggered wildfires across Europe this summer, while lowering water levels in key rivers like the Rhine and Danube. The continent is warming twice as fast as the global average, threatening economic damages that could spiral into hundreds of billions of euros.

“There can be no repeat of this summer,” von der Leyen said. “Far too often, national budgets become the insurer of last resort. We need to take action to close this gap.”

Von der Leyen announced that the commission, the bloc’s executive branch, would put forward a European Water Initiative to combat waste, adding that key rivers, like the Danube and the Garonne were “disappearing before eyes.”

With around 90% of some rare earths currently coming from China, the EU would also establish a European Corporation on Critical Raw Materials to stockpile key elements in clean transition technologies and defense, von der Leyen said. She pledged to accelerate the shift away from climate-warming fossil fuels, which have soared after the Iran war impeded flows of oil and gas through the key Strait of Hormuz.

“Since the start of the conflict, imported fossil fuels cost us an additional €90 billion, without a single molecule of energy added,” von der Leyen said. “We need to double down on our affordable and homegrown, clean energy. Be it renewables and nuclear.”

Photograph: Firefighters try to contain a fire at a warehouse facility during a wildfire near Oraiokastro, a suburb of Thessaloniki, Greece, on July. 4, 2026; photo credit: Konstantinos Tsakalidis/Bloomberg