Pilots

This pilot focused on the problem on property damage caused by clay shrink swell events and raising homeowner awareness of the potential financial risks associated with inadequate insurance cover. This phenomenon poses a substantial threat for homeowners as the property damage can range from minor cosmetic damage to serious structural issues, often requiring costly repairs. Many areas in Europe have high clay content in the soil and are potentially at risk and the level of risk is projected to increase due to climate change. We developed the Clay Shrink Swell Building Damage Assessor, or CSSBDA which is a web-based tool designed to communicate financial and related risks to homeowners in France in a clear and accessible way. At the same time research was carried out to assess CSS risk and insurance frameworks across other EU countries to inform a Risk Alert Briefing addressed to key stakeholders.

This pilot addressed the insurance protection gap in the agriculture sector. To meet this goal, the pilot co-developed a demand-driven, index-based insurance (IbI, also known as parametric insurance) solution that meets farmers' needs while ensuring viability for insurance providers. A market analysis was conducted in the Boreal region (Finland) to assess demand for index-based climate insurances. Market analyses were also carried out in the Mediterranean region (Spain and Italy). In Southern Spain, in collaboration with the farmer association ASAJA Jaén, the pilot identified local climate risks, farmer needs, and insurance gaps to co-develop an IbI solution, while also developing a tool to support its design, validation, and application of IbI. In addition, the pilot explored the complementary role of climate services in supporting on-farm adaptation, including the operationalization of seasonal forecasts for drought-related indicators in the case study location, and assessed the potential for replicating these solutions across the EU.

Insurance is a risk transfer solution which can compensate the financial losses of forest stakeholders following climate disasters, while encouraging landowners or forest managers to invest in risk reduction and adaptation measures. This pilot on windthrow risks focused on integrating forest vulnerability into insurance modelling. It integrated detailed forest characteristics (such as species composition and stand structure) into a forest vulnerability map, and developed a Wind Power Exposure Index (WPEI) taking wind speed, wind direction, and storm duration into account. Together, these two components enable the estimation of expected storm damages at a forest-stand level, and support insurance product development and pricing. Initially developed and tested in Germany, the modelling framework was subsequently validated across several European countries, including France, Ireland, Scotland, and Denmark. Indicative insurance pricing simulations based on the model outputs resulted in a premium of approximately 5€ per hectare per year for an insured value of 1,000€ per hectare, broadly aligned with observed willingness-to-pay levels for forest insurance in Europe. The pilot demonstrates that wind risk can be quantified in a scalable and replicable way, while highlighting the importance of regional calibration and ground-truth validation prior to product deployment.

Due to increased drought events, wildfires are increasing both in Europe and worldwide. Climate conditions, ignition triggers, and vegetation covers are the key drivers of wildfire propagation and intensity. To reduce vulnerability to fires, it is crucial to address how insurance mechanisms can promote adaptation measures at different levels. Thus, the purpose of this pilot was to develop innovative wildfire forest insurance to incentivise adaptation measures at household and forest association levels, focusing on the integration of adaption measures into wildfire risk assessment and insurance design. Conducted in Central Portugal, the pilot combined wildfire hazard modelling with adaptation scenarios derived from national and regional fire management plans developed by the Agency for Integrated Rural Fire Management (AGIF). Two complementary fire spread models were calibrated using historical fire data and satellite observations, and used to simulate baseline and adaptation scenarios involving primary and secondary fuel management networks. Results show that well-designed and properly maintained fuel management measures can reduce annual burn probabilities by approximately 30-40%, whereas poorly maintained or degraded measures yield risk reductions of only around 5%. When translated into insurance pricing, fully implemented adaptation scenarios resulting in substantial premium reductions – up to 70-95% for forest coverage and 80-84% for building exposure, depending on the model and insurance structure utilized. Primary fuel breaks were identified as the main driver of premium reduction in forests, while secondary fuel breaks played a dominant role in reducing risk for buildings and settlements. Beyond premium effects, adaptation measures also enabled more favourable insurance conditions, such as lower deductibles and higher coverage limits, supporting continued insurability under worsening fire-prone climatic conditions.