Author(s): Elisabetta D???Apolito*
In recent years, the emphasis on systemic risk has shifted predominantly to the insurance sector, which has traditionally been regarded as less susceptible to such risks than the banking sector. This paper reviews principal regulatory and supervisory measures within Europe and the tools planned for the insurance industry within this geopolitical framework. The involvement of insurance companies in systemic risk has increased due to their heightened exposure to overall risk and greater sensitivity to interest rate fluctuations. In light of these considerations, implementing measures that strengthen macroprudential oversight through coordinated international regulations is crucial, particularly for smaller firms that face elevated risks. A significant area of focus is parametric insurance, a form of coverage that disburses funds when a predefined external event occurs, with premiums determined by the likelihood of the trigger event. Unlike conventional insurance, parametric insurance provides quicker access to funds, which is particularly advantageous for immediate responses to incidents such as climate change, geopolitical tensions, and agricultural risks, as compensation is assured upon the occurrence of the specified event.