SCOTT DETROW, HOST:
Starting January 1, all Italian companies will be required to carry insurance against natural disasters. The move comes as Italy faces more and more of them made more extreme by global warming. The G20 Climate Risk Atlas estimates that without reducing emissions drastically to address the climate crisis, Italy could lose nearly 4% of its GDP by 2050. That's tens of billions of dollars. To help us understand more about the new policy and how it compares to what other countries are doing to manage climate risks. We are joined by Petra Hielkema, chairperson for the European Insurance and Occupational Pensions Authority. Welcome to ALL THINGS CONSIDERED.
PETRA HIELKEMA: Thank you. Thank you, Scott, for having me.
DETROW: Let's start with this. Can you, first of all, just help us understand the logic behind this lawj? Like, how does carrying insurance against natural disasters contribute to these broader climate goals?
HIELKEMA: Yeah, that's a great question. And it's a question, actually, that is asked in many capitals of the world, I would almost say. Why? What we've seen is that with climate change, there's a lot of climate events that are happening in many countries, also in Italy, and they range from floods to drought to thunderstorms that result in damages. Some of those damages are insured but not a lot. And so often, the government steps then in and covers for losses.
This has become unsustainable. And the reason for that is that major disasters keep happening at a pace much quicker, faster than we have seen so far. And that means that damages are going up very quickly as well. And as such, the question is, if this trend - and it's likely to continue - of more damages per year because of climate events is continuing, how are we going to pay for the damages?
DETROW: So is the goal to help make sure that all of the costs are paid for, or is the goal to make businesses better understand the real cost here and maybe not build in the vulnerable place to begin with?
HIELKEMA: Well, I think that is exactly what we need to get to. I think the first, of course, is that you want to - I think everyone wants people to get help. I mean, if you look at the television, you see the events, help is needed, and rebuilding is needed. However, at the same time, we also need to ask ourselves, can we limit the damages? Can we avoid damages? And that can indeed mean that you don't build somewhere or you move. But it could also mean that you adapt, actually, buildings. And having insurance in the place is actually putting risk managers in a position not only to assess the risk and pay when things happen, but also to assess the risk and then indicate what measures could be taken to avoid damages in the future.
DETROW: So we're talking about Italy here. I'm curious what other countries are doing. Are there similar policies or laws in place? Is this a conversation elsewhere?
HIELKEMA: This is definitely a conversation in Europe but also in the U.K. and elsewhere. Very concrete, Spain and Italy have schemes currently in place that are addressed not only to businesses, but also to citizens. So does Switzerland. We have been assessing 12 of these schemes now, and we will be publishing a report next Wednesday where we will discuss these schemes but also do some proposals on what you could think of when you want to establish a scheme like this also on an EU level.
DETROW: That is Petra Hielkema, chairperson for the European Insurance and Occupational Pensions Authority. Thank you so much for helping us understand this a little better.
HIELKEMA: Thanks, Scott.
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