Meeting of the Hanfa Council: Legislative changes and European supervisory guidelines for a sustainable future
At today’s meeting, the members of the Council of the Croatian Financial Services Supervisory Agency (Hanfa) considered inter alia new approaches and strategies in insurance for a sustainable future taking into account the inflation, digital transformation, climate change, geopolitical changes and insecurity and economic inequality.
The inflation and the growth of prices and interest rates have a significant impact on all stakeholders in the insurance market. Under these circumstances, insurers must take special care of sustainable investment strategies and contributions to reducing the negative effects of inflation by distributing sustainable insurance products, and pay attention to the increased risk of cancellation and termination of contracts. Supervisory authorities on the national and European levels are actively working on their part, monitoring the supervisory and product management processes as well as informing customers about the influence of inflation on financial services, all with the purpose of ensuring customer protection. At the same time, a lot of attention is focused on risks related to digitalisation of insurance and the future role of insurers in the protection of companies and citizens against future climate disasters by means of guidelines and regulations.
Extreme weather events and natural disasters such as floods, droughts, heat waves and storms are becoming more frequent across the European Union, increasing the risk of harmful consequences for citizens and the private and public sectors. The European Insurance and Occupational Pensions Authority (EIOPA) has developed the first European supervisory dashboard that will monitor the insurance protection gaps for natural catastrophes. The current analysis shows that only one quarter of the total loss caused by extreme weather conditions and climate-related events as well as natural catastrophes in Europe is insured. In Croatia, the greatest gap is depicted in insurance from earthquakes, whereas a great lack of insurance from flood is visible at the second place. Heavy rains and river floods occurring year-round along with devastating fires in the summer are becoming an increasingly realistic risk in the Republic of Croatia.
To encourage insurance coverage on the level of the EU as a whole, EIOPA and the ECB suggest that insurers conceive their insurance policies so that they strongly encourage households and companies to protect themselves against disasters, and one possible solution is for the government to establish public-private partnerships and support for a partial coverage of expenses insurers could incur in case of major disasters.
The Hanfa Council is an advisory body of Hanfa that meets regularly and provides opinions, expert and scientific advice for development and improvement of the supervisory practice. It consists of nine members: President of the Board of Hanfa (ex officio), five members elected by the representatives of associations of supervised entities at the Croatian Chamber of Economy, and three members appointed by the Government of the Republic of Croatia.
