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The partners of PIISA believe that piloting and demonstrating is the key to engagement and continuous learning.

That is why we, in the PIISA project, will, via five pilots, develop innovative concepts, advanced products and services that aim to enable co-creation with stakeholders and potential users. Each pilot will be made up of three parts, or Loops as they are called in PIISA.

The following themes will be explored in the pilots:

Pilot 1 - Green Roof Insurances,
Pilot 2 - Addressing soil stability risks for home owner insurance holders,
Pilot 3 - Insurance Services for Agriculture,
Pilot 4 - Forest Insurances against selected biotic and abiotic risks
Pilot 5 - Wildfire insurance enhancing adaptive actions.

Description of PIISA Pilots

PILOT 1: Green roof insurances

Pilot lead: IVM
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In this pilot, we study how insurance can stimulate the adoption on urban Nature-Based solutions, specifically green roofs. The overarching goal is to develop a European business model for stimulating Nature-Based Solutions adoption.

We will start with the cities of Amsterdam, Rotterdam, the Hague, Utrecht, Eindhoven and Groningen in the Netherlands, where IVM and CAS will evaluate a climate adaptation strategy, implemented by the Dutch insurer Interpolis, which aims to encourage policyholders to adopt green roofs. Furthermore, a broad range of societal benefits of green roof adoption will be assessed in surveys that include discrete choice experiments among Dutch residents. Based on the assessed benefits, cost-benefit analyses of green roofs will be performed, including e.g. flood risk reduction, recreation and biodiversity benefits.

The effectiveness of insurance solutions, e.g. information provision and insurance premium discounts, to stimulate the adoption of green roofs will also be tested in these experiments. Enablers and barriers of the uptake of green roofs will be examined as well. Moreover, public-private partnerships will be identified to investigate sustainable finance arrangements that stimulate investments in green roofs.

PILOT 2: Addressing soil stability risks for homeowner insurance holders

Pilot lead: 2DII

The pilot addresses homeowners and the risks associated with clay soil shrinkage and swelling. There is currently a significant challenge with the lack of understanding regarding the potential financial implications associated with this hazard. The risk is increasing rapidly due to climate change, and it can potentially lead to large financial losses for homeowners. Our goal is to create a dashboard that educates and empowers homeowners across Europe to manage their financial risks from gaps in insurance coverage effectively.

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    During PIISA, our main objectives are the following:
  • Develop a methodology for assessing potential financial losses in the event of a clay soil shrinkage event occurring.
  • Design a web dashboard to educate homeowners in relation to their insurance cover that employs the above mentioned methodology.
  • Create a guide for homeowners on how to prepare for and advocate effectively during their next appointment with their insurance advisor to ask for adequate insurance coverage.

The dashboard development process begins in Lyon, France, where we will collaborate closely with local authorities and homeowners. Lyon serves as our starting point, and from there, we will expand our efforts to broaden our scope to other EU countries.

The pilot will result in a web application and accompanying guide. The web application will be tested to assess user experience and the ability of end users to understand messages conveyed and make decisions on insurance. Its replication will be tested in other contexts and locations facing similar soil-related hazards.

PILOT 3: Insurance services for agriculture

Pilot lead: BSC CNS
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The pilot aims at establishing a weather index insurance system that is effective but also easily understood and comprehensible for end-users. To this end, we need to ensure that the indices selected for the insurance entail a basis risk that is acceptable by the end users. Basis risk means that the pay-out may be either higher or lower than the occurred damage.

The pilot starts in the Boreal region in Finland, with the objective of exploring the market potential of weather index insurances and derivatives in the Finnish context. While these financial instruments are currently rare or totally non-existent in Finland, they might be of great benefit for Finnish farmers in the future, where climatic extreme events, already happening today in Central and Southern Europe, could happen. We connect with farmers in Finland and work closely with them to understand their needs concerning climate-related insurances in the early stage of the project, which bring insights on the agroclimatic indicators.

PILOT 4: Forest Insurances against selected biotic and abiotic risks

Pilot lead: AXA Climate

To promote the long-term resilience of European forests, forest owners, managers and investors must develop adaptation practices integrating climate change, that will allow to decrease the vulnerability of this natural asset and maintain all the associated ecosystem services. In response to these challenges, forest insurance against climate threats becomes a valuable tool by enabling restoration and conservation efforts.

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The pilot aims to actively engage forest owners and stakeholders in exploring existing forest insurance products, and designing innovative climate covers that would consider evolving climate risks and potential adaptation measures undertaken by the client, in order to promote the most resilient practices.

The first phase of the pilot focuses on building a use-case of climate forest insurance in Germany, working with a private forest owner. It involves identifying the major weather-related threats for the plots (wind and diseases such as bark beetle), comparing existing products in the area (wind and fire), and identify with the local partner (not insured today) his appetite for which type of covers. Different scenarios of insurance design will be proposed, with a variation in risk appetite, triggers, insured value.

PILOT 5: Wildfire Insurance Enhancing Adaptive Actions

Pilot lead: AXA Climate
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In a context of a changing climate, wildfire acceleration is an observable disaster in Europe and worldwide. Climate condition, ignition trigger and vegetation cover are the key drivers of wildfire intensity and propagation. To reduce the vulnerability to fire, it is crucial to address how insurance mechanism can promote adaptation measures at different levels, engaging with public entities in charge of the National Adaptation Plans (NAP).

The purpose of this pilot is to develop innovative wildfire forest insurance to incentivize adaptation measures at household and forest association levels, with a first case-study in Portugal.

The pilot begins in the central region of Portugal by identifying the adaptation solutions that have the potential to be combined with insurance modelling. Measures relevant to central Portugal context will be searched for in collaboration with the Central Regional Coordination and Development Commission and their regional fire management commission. The current wildfire models used by the public entity will be analyzed, and their adaptation scenarios studied, with a focus on the impacts at the forest management level and individual household level.

Next phases will co-design innovative insurance concepts to support wildfire prevention and management in Portugal. Finally, the replicability and transferability of what developed in Portugal in other areas in Europe will be studied, in particular for Finland.

What do the first innovation rounds tell us?

The locations of the first innovation rounds of the pilots.

PIISA starts the pilots with the most mature cases.

The first innovation rounds of the pilots are designed to cover different European biogeographical regions: atlantic (Netherlands, pilot 1) and continental (France, pilot 2 and Germany, pilot 4). boreal (Finland, pilot 3), mediterranean (Portugal, pilot 5).

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    According to Risk Data Hub’s vulnerability index (European Commission Disaster Risk Management Knowledge Centre 2022*), the vulnerability indices of the first pilot countries are:
  • Pilot 1 Amsterdam, Netherlands: 4-5
  • Pilot 2 Lyon, France: 4 - 5
  • Pilot 3 Finland: 2,5 - 4
  • Pilot 4 Germany 4 - 5
  • Pilot 5 Central Portugal 5 - 6

The pilot 1 starts in the Netherlands. The cities in Central Europe are densely built and populated, so there is a need for solutions that address heatwaves and droughts in such areas. Heatwaves are getting more frequent, longer and hotter in Europe leading to droughts as well as the precipitation patterns are changing, with downpours and other precipitation extremes increasing in magnitude. (European Environment Agency 2024**).

In France, the issue of shrink-swell clay soils hazard is connected to increasing droughts and on the other hand, intermittent heavy rainfall. During longer droughts the soil will dry severely which will result in uneven subsidence. Significant saturation will also damage the soil. The city of Lyon, where the pilot 2 starts, is especially vulnerable to this risk and the risk is growing rapidly.

The vulnerability index in Finland is relatively low compared to other regions in Europe. According to the European Climate Risk Assessment (2024) the main climate risks in European agriculture are reductions in crop and livestock production from changing growing conditions and extreme weather events. However, the farmers in Finland are not very well prepared for all future risks, for example for droughts as there are no irrigation systems widely in place.

Forestry is an important industry in Germany. According to the European Climate Risk Assessment (European Environment Agency 2024), it is projected that climate change will increasingly affect the functioning and productivity of forests in all climate scenarios. The first innovation round of pilot 3 considers climate risks such as forest fire, drought and pest outbreaks.

The pilot 5 starts in Portugal where the vulnerability index is the highest. The effects of climate change will affect Southern Europe the soonest and heaviest. Above average temperatures and drought conditions have already led to elevated risk of wildfires in the area. According to the European Climate Risk Assessment (European Environment Agency 2024), Southern Europe will experience extensive wildfires each year in the near future (2021 - 2040) and in the longer term the fires can be more frequent, intense and severe as the climate crisis progresses.

*) European Commission Disaster Risk Management Knowledge Centre. (2022). Risk Data Hub Vulnerability Dashboard. https://drmkc.jrc.ec.europa.eu/risk-data-hub#/dashboardvulnerability

**) European Environment Agency. (2024). European Climate Risk Assessment. EEA Report 01/2024. https://www.eea.europa.eu/publications/european-climate-risk-assessment