(Science|Business) Former EIT Digital scouts climate risk innovations for insurers

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28Digital, the rebranded European Institute of Innovation and Technology (EIT) Digital community, is seeking innovations that could help the insurance industry predict or mitigate climate change risks. 

“By identifying solutions that can be seamlessly integrated into insurance products, we [can] help insurers move from a reactive model to a proactive one,” said Diva Tommei, chief innovation and investment officer at 28Digital, in a statement.

The project has been commissioned by an unnamed “leading European insurance group,” for an undisclosed fee, and while 28Digital is currently working with other organisations, the results of this specific search will be exclusive to the insurer in question.

Specifically, it will be looking for companies with solutions for the prevention, early warning and impact mitigation of natural catastrophes. These technologies must have moved beyond the proof-of-concept stage and be ready for deployment across large customer bases as add-on-services to insurance products, without substantially raising policy costs.

The aim is to identify three to four solutions in a range of different risk categories, including damages related to weather, flooding, lightning strike, storms, earthquakes and wildfires.

“[This way] a company doesn’t have to pull up an innovation or an R&D department because there are other companies already delivering,” Tommei said. Interested organisations are invited to submit their solutions for consideration through an online form.

The insurance industry is currently ill-equipped to deal with climate risks, with the result that much of the associated damage is simply not covered. 

According to the European Environment Agency, insurance covered only €160.4 million of the €822.6 billion costs attributable to extreme weather and climate-related events in the EU between 1980 and 2024. This gap could widen as global warming further exacerbates the risk of disasters, pushing up premiums and prompting insurers to withdraw from high-risk areas.

Hence the need for new technologies. “Innovative solutions are vital; but only by integrating technology, incentivising prevention, and forging cross-sector alliances can insurers stay ahead of the rising risks and costs of climate change,” said Holger Greif, partner at consulting group Eraneos, which helps insurers modernise their operations.

Innovative models

Against this backdrop, the insurance sector has been increasingly looking to develop innovative insurance models such as parametric policies, which automate payouts based on pre-defined indices rather than assessing actual losses. 

“Industry leaders are already deploying advanced technologies such as internet of things-based early-warning systems, real-time risk assessment tools and parametric products that reward risk‑reducing behaviour,” Greif said. “Many are also partnering with global organisations and public authorities to develop disaster resilience initiatives and establish shared climate risk modelling standards.”

For example, international insurance group Allianz, which is not 28Digital’s client for this project, has been developing innovative risk-transfer solutions to help its customers adapt to increasing climate risks. This includes testing new technologies such as flood-proofing homes, sending early warnings for severe weather conditions and using advanced models and pricing systems to reduce their exposure to natural catastrophes.

“We are also continuously raising public awareness for climate risk,” a spokesperson for the group said. “Since fall last year, we have a large NatCat [natural catastrophe] campaign going on, providing customers and interested parties with knowledge and resources needed to safeguard their home and community from natural catastrophes.”