gap ’, ecb - eiopa staff paper, april 2023 ; and ‘ enhancing the insurance sector ’ s contribution to climate adaptation ’, oecd, policy paper, march 2023. ‘ high - level principles for ppips against natural hazards ’, presented at the end of may in stresa at the meeting of g7 finance ministers and central bank governors. private insurance contracts exploit the opportunities of diversification between uncorrelated risks, and can rely on risk transfer and pooling techniques, with benefits ultimately shared between the insurer and the insured. if well designed and implemented, it is certain, prompt and directly commensurate with the damage individually suffered ; it can provide powerful incentives for prevention. however, if there are no provisions for mandatory coverage, it is subject to adverse selection. moreover, it cannot achieve the redistribution goals that public intervention may instead wish to pursue. a recent study made by the bank of italy together with the university of florence4 looks at hydrogeological events that took place in italy between 2010 and 2018 and their effect on firms survival and performance. in the three years following the event, the affected companies are significantly more likely than others to exit the market ; even if they survive, their profitability declines and staff numbers decrease. insurance can mitigate those effects at the individual level. in addition, the existence of externalities makes underinsurance of such risks also as a matter of public interest. the destruction caused by a natural disaster has consequences that go beyond those directly affected, through the dense network of interdependencies that characterises economies. the swifter availability and granularity of insurance relief compared with that provided by discretionary ex - post public interventions should contribute to reducing these consequences. it is not only insurance that can provide incentives to make businesses and households less fragile and more resilient to disasters. supervisors, for instance, have been insisting for some time that banks should take physical and other nature - related risk into account when screening the financial merits of projects. risk mitigation measures should be a factor in setting conditions for loans and other forms of financing. as is well known, italy is particularly exposed to seismic and hydrogeological risk, including landslides and river floods, as we were sadly reminded yesterday. it also has a 9, 000 - km coastline, of which 3, 400 km, especially in the upper adriatic sea, can suffer coastal floods. yet according to analyses by various research centres

, and that potential customers are in the best position to understand the price and extent of coverage and other conditions, is important not only in the name of fairness, but also in order to guarantee that market competition functions effectively. insurance education and transparency : at ivass, we are committed to contributing to both these aims, within our mandate, as best we can. 9 see initiatives on the draft framework law on post - disaster reconstruction. see guiso l. and jappelli t., ‘ are people willing to pay to prevent natural disasters? ’ csef, working paper no. 723, june 2024. on the domestic front, ivass participate in the work of the sustainable finance table at the mef, of which consob, covip, mimit and mase are also members. there, among other things, the bank has promoted the establishment of a working group on the insurance protection gap ( ipg ) to enhance the role of insurance companies as providers of protection for businesses and households against physical risks arising from natural disasters and climate change. at the international level, ivass is working on the european commission's project called ‘ technical support instrument 2023 - flagship esg risk management framework for the financial sector ’. as part of this project, in - depth studies will be conducted on the causes of low insurance coverage against natural disasters in italy, and possible prevention measures and policy recommendations will be identified to close our protection gap. finally, ivass contributes to the debate on the insurance protection gap taking place in the international insurance and non - insurance cooperation fora of which it is a member : the iais, the network for greening the financial system ( ngfs ), the sustainable insurance forum ( sif ) and the forum for insurance transition to net zero ( fit ).