Strengthening flood resilience in Europe: modelling joint insurance reforms and coordinated protection strategies to improve flood risk management

Flooding is Europe’s most costly natural hazard, with economic losses almost ten times higher than in the 1990s, and riverine floods alone accounting for more than one third of all disaster-related damages. Despite its growing importance, flood risk management strategies remains highly fragmented, which is particularly evident in the case of insurance. European countries have in fact adopted diverse insurance market structures, ranging from solidaristic, highly regulated systems with broad coverage, to voluntary, risk-based markets with low penetration and strong dependence on post-disaster public aid. This fragmentation raises concerns about the sustainability, fairness and efficiency of current approaches in a changing climate, and have prompted growing interest in more coordinated European approaches.

In this study, we develop an integrated model to assess flood insurance market reforms and their interaction with optimized public investments in structural flood protections under current risk conditions, estimated through EFAS data. We simulate three insurance market configurations —fully risk-based, solidaristic, and public–private partnership— implemented either nationally or through a single EU-wide pool, where insurance take-up is modelled via an affordability threshold calibrated to reproduce observed penetration rates under current conditions.

Our results indicate that countries with low insurance penetration incur high costs when acting in isolation. In contrast, EU-level cooperation, through cross-border insurance pooling and coordinated investments in flood protection, substantially increases insurance coverage at lower overall costs, while also improving equity across countries. Notably, an integrated and moderately solidaristic EU-wide insurance scheme could already ensure affordable residential flood insurance for all exposed households, significantly reducing reliance on post-disaster public aid.
Overall, jointly designed insurance reforms and coordinated flood protection strategies offer strong potential to enhance financial risk sharing and support a more cohesive and climate-resilient Europe.