Written by: Islam El Sakka
The French Parliament, in both chambers, has adopted in its first reading a legislative text aimed at enshrining climate adaptation into law and reforming the natural disaster system, in a move that reflects escalating climate risks and their impact on the insurance sector.
Natural Disaster System Faces Warming Test
The natural disaster system in France was established in 1982 and is based on the principle of solidarity, where every property insurance contract pays an additional uniform-priced premium regardless of the risk level of the insured property. Insurance companies then reinsure with the Central Reinsurance Fund, which enjoys an unlimited state guarantee.
According to the Court of Auditors, this system has processed 3.6 million claims exceeding 50 billion euros, and the state guarantee has only been called upon once following the storms of 1999. However, the model was designed for exceptional cases, while climate warming is making these disasters more frequent and commonplace.
Continuous Rise in sinistralité
The system is witnessing a continuous escalation in insured loss rates, necessitating a structural reform that ensures the sustainability of coverage and the system's ability to withstand the increasing frequency and intensity of climate disasters.
