Urgent: CAT NAT Regime Under Threat Amidst Rising Climate Risks
June 24, 2025 – In a rapidly changing climate landscape, the CAT NAT regime, a cornerstone of France’s insurance sector, faces unprecedented challenges. As climatic hazards intensify, insurers and reinsurers are urged to adopt preventive measures to ensure the regime’s sustainability.
Climate Risks and Financial Implications
On April 2, 2024, Christophe Béchu, then Minister of Ecological Transition, warned that the cost of climate-related damage could soar by 50% by 2050. This prediction underscores the growing financial burden on the CAT NAT regime, established in 1982, which relies on a national solidarity mechanism to absorb claim costs.
The French model’s strength lies in its ability to contain insurance premiums and ensure accessible risk coverage. The state’s involvement acts as a reassuring factor, encouraging individuals to subscribe. In contrast, Germany’s model, where insurers bear the cost alone, sees lower subscription rates due to perceived expense.
Sustainability in Question
Despite its current effectiveness in managing claims, the CAT NAT regime’s financial sustainability is under threat. With increasing claims, insurers’ premiums financing the central reinsurance fund will rise, leading to higher costs for insured individuals.
Denis Verot, manager, and Emmanuelle Crosnier, partner, at Synaxia Consulting, emphasize the need for preventive measures. These include pooling resources and leveraging agency networks to stay close to the ground and preemptively address risks.
Preventive Measures for Long-Term Stability
Insurers and reinsurers must prioritize prevention to ensure the regime’s long-term stability. This involves not just pooling resources but also maintaining proximity to communities through agency networks. Such strategies can help mitigate risks and keep premiums manageable.
Expert insights suggest that by focusing on prevention, the insurance sector can better prepare for and absorb the financial impacts of climate-related claims, ensuring the CAT NAT regime remains robust.
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