Development of MSPs for the Case Study Testing the EU Solidarity Fund for Eastern Europe/Romania

Hochrainer-Stigler, S., Ioncica, M., Lorant, A., & Petrescu, E.-C. (2014). Development of MSPs for the Case Study Testing the EU Solidarity Fund for Eastern Europe/Romania. Deliverable 7.2, ENHANCE Project, IVM, Netherlands (1 May 2014)

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Abstract

Large parts of both public and private disaster losses in Europe are not insured, which outs significant financial pressure to the victims themselves and the national and regional governments as well. The economic vulnerability generated by natural disasters can be already catastrophic for some (especially Eastern European) Member States and recent estimations suggest that without robust disaster risk management, even wealthier MS can face financial challenges in the future. This case study investigates multi-sector partnerships at different levels aiming to manage the financial risks associated with natural disasters. Our primary objective is to explore possibilities for a potential EU-wide partnership that would enhance the financial resilience of EU Member States against earthquakes and floods that are among the most costly disasters in Europe.

One of the partnerships examined in this case study is a potential (currently non-existing) EU-wide partnership that can be established by reorienting the European Union's main post-disaster instrument, the European Solidarity Fund (EUSF). EU policy-making bodies including DG Regional and Urban Policy and DG Internal Market and Services are one of the key partners in the partnership since they have the relevant expert knowledge concerning the EUSF and the insurance market. Primary insurance companies, reinsurers (with a special attention to Europe Re) are also important partners due to their key role in disaster risk financing arrangements. National governments are also important because they have both implicit and explicit liabilities in the context of natural disasters, and in addition they play an important role in risk reduction.

The second partnership in this case study deals with the financial risks associated with earthquake and flood events in Romania. Important elements of this partnership are the insurance companies that provide mandatory and facultative insurance policies to homeowners covering flood and earthquake risks, the national government and the local authorities which have key roles in disaster management including the responsibility of making available the necessary resources after disasters.

ENHANCE will provide support to the above described two partnerships by delivering risk assessments and developing different options to enhance the financial resilience of EU Member States against flood and earthquake risks. Copula approaches are applied to derive at country loss distributions which are used to estimate the risk of selected MSP to current and future threats. The results will also be used for Romania on flood risk and an extreme value approach applied for earthquake risk. These results will provide the basis for exploring possibilities to increase the use of risk financing instruments with risk reduction measures. This analysis will include both quantitative risk management approaches as well as embed it within the current policy contexts within Europe and Romania and investigates the policy challenges under current legislative changes for risk financing and risk reduction policies.

Item Type:	Other
Research Programs:	Risk, Policy and Vulnerability (RPV) Risk & Resilience (RISK)
Bibliographic Reference:	Deliverable 7.2, ENHANCE Project, IVM, Netherlands (1 May 2014)
Depositing User:	IIASA Import
Date Deposited:	15 Jan 2016 08:51
Last Modified:	27 Aug 2021 17:39
URI:	https://pure.iiasa.ac.at/11180

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