If you think disaster insurance is getting pricey in the States, take a look at what's happening on this side of the Atlantic.

Hello, this is the Marketplace Morning Report, live from the BBC World Service.

I'm Leanna Byrne. Good morning.

A new report from the European Central Bank and the EU's insurance regulator calls for a big shake-up in Europe's climate insurance system. It's planning for a new

EU-wide insurance scheme that would help protect businesses and homeowners from extreme weather. The

idea is to use reinsurance, which pools risks to make sure people are actually covered, since right now

only about a quarter of climate-related losses in Europe are insured.

I've been speaking to the report's authors about this. First, I asked Linda Rosova from the

bank's financial stability team about how it would work. With climate change, we face more frequent

and more severe disasters. And this has economic implications and costs. Since 1980s, natural catastrophes cost

around 900 billion euro in direct economic losses in the EU. Only a quarter of these losses

are insured, and this insurance protection gap is expected to widen further with the rising risks.

To manage that, our paper proposes a two-pillar EU scheme. The first pillar

and EU reinsurance scheme would increase insurance coverage for people and businesses. The second

pillar, an EU disaster fund would strengthen disaster risk management by governments.

Now, what are the broader economic consequences of inadequate insurance coverage?

There are three aspects to that.

Low insurance coverage can pose risks to economic growth as it delays economic recovery.

It can pose risks to financial stability because banks provide mortgages to households and loans to businesses.

If these are not insured, banks can suffer losses.

Low insurance coverage also increases fiscal treasure for countries that step in to cover uninsured losses.

Linda Rossova there, I also spoke to Pamela Sherman's, an expert at the insurance regulator's

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