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European insurers are increasingly incorporating the threat of biodiversity loss into risk assessments but more work is needed to quantify the financial impact, according to a report from the European Insurance and Occupational Pensions Authority (EIOPA).
About one in every five insurance companies mentions biodiversity in their own risk and solvency assessment although current assessments remain largely qualitative, the report said.
“EIOPA observed some promising practices on the market that reveal the insurance industry’s growing awareness of the potential implications of biodiversity loss – for the economy as a whole, as well as for certain lines of business and specific economic activities,” it said.
Financial regulators have been putting more focus in recent years on the links between nature loss and risks to people, the economy and the environment.
Earlier EIOPA research has found that around 30% of insurers’ direct corporate bond and equity exposures rely on at least one ecosystem, especially water resources.
The industry increasingly recognises biodiversity loss as a significant emerging risk but faces challenges in quantifying its financial impact, as currently it is primarily considered from a reputational point of view, EIPOA said.
“The lack of global metrics, the regional specificities of biodiversity, and the difficulty of distinguishing biodiversity risks from climate change risks pose challenges to making actionable risk assessments today,” the report said.
To address these issues, EIOPA said it will engage with insurers to ensure they develop models and scenarios and risk-based measures to manage biodiversity risk. It wants to promote capacity building through a structured dialogue between supervisors and industry representatives.
It also wants to help the industry to better understand the interplay between biodiversity and climate risks, including the potential benefits of action to address natural catastrophe insurance gaps.
EIOPA recommended in November that fossil fuel stocks and bonds held on insurers’ balance sheets receive additional prudential treatment to accurately account for the higher risk of such assets.
This page was last updated July 3, 2025
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Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
