PARIS: The European Central Bank and the EU’s insurance regulator published Wednesday a proposal to create a European-wide system to better respond to the costs of natural catastrophes.

Scientists believe that natural disasters will increase in frequency and severity as global temperatures rise, but currently only about a quarter of damages due to natural catastrophes in the EU are covered by an insurance policy.

With such scant coverage leaving people, businesses and governments exposed to major economic risks, the ECB and the European Insurance and Occupational Pensions Authority (EIOPA) proposed a two-pronged solution.

The first would be to create an EU-wide reinsurance scheme for natural catastrophe coverage to help expand availability and ensure affordability.

“By pooling private risks and perils across the EU, this scheme would exploit economies of scale and diversify the coverage of high risks at the European level,” they said in a joint statement.