Author: Oihana Luque Armand (iCatalist)

Introduction: Finding common ground

The notion that public and private interests are inherently opposed is a common perception in economics. This view stems from the belief that private entities, like businesses, primarily seek profit, while public authorities aim to maximise collective welfare. This often creates an apparent conflict between profit motives and the public good. However, this dichotomy is not always so clear-cut. While there are instances where private interests can conflict with public goals—such as in environmental regulation or the provision of essential services—there are also numerous situations where they can align. Collaboration and negotiation often reveal opportunities for mutual benefit. The key lies in identifying these opportunities and leveraging the right partners, timing, and tools.

This is the challenge the SOTERIA project addresses. Our goal is to develop innovative insurance solutions tailored to community needs. Over the past year, we’ve worked to bridge gaps between the insurance sector, public authorities, and communities. Here, we share some of the lessons learned from our journey so far.

Aligning insurers’ approaches with community needs

Communities face risks from climate change, natural disasters, and economic instability. Insurers play a crucial role in mitigating these risks. However, their methods often are not well known and highly technical thus appear disconnected from real-world experiences. Aligning insurers’ approaches with community needs involves understanding why current solutions fail. Common issues include mistrust between insurers and communities, complex insurance contracts, perceptions of lack of mutual benefit, and inadequate incentives. 

For example, a survey by our project partner, Genillard & Co, in Zadar County (Croatia) revealed that while farmers have experienced increasing natural hazard damage, many lack agricultural insurance due to perceived high costs and products that are not well tailored to their needs. Based on these insights, Genillard & Co. is working with local partners to develop improved insurance solutions specifically designed to meet farmers’ needs.

SOTERIA’s approach: creating mutual benefits

One of the key objectives of the SOTERIA project is the development of regional or local Risk Data Hubs. These hubs, inspired by the EU Risk data hub, are designed to facilitate the sharing of disaggregated insurance data—such as past loss and damage data—with public bodies and other interested stakeholders while respecting data protection laws. This data-driven approach aids public authorities in risk assessment and compliance while helping to better target resilience measures and initiatives. For insurers, these initiatives foster a more resilient environment, potentially reducing claims frequency and severity.

Another example of creating mutual benefits is our work on wetland restoration in the Valencian regional community (Spain). The project focuses on restoring coastal wetlands, particularly La Marjal dels Moros, and involves collaboration with regional governments, environmental organisations, local administrations, farmers, local industries, and citizens. By demonstrating that wetland restoration can reduce risks such as flooding, we seek to show that this initiative benefits surrounding industries and viĺlages, while potentially offering insurers a new opportunity for devising innovative insurance solutions. For insurers, this could mean developing new insurance products for nature-based solutions (NbS) or viewing the restoration as a valuable investment that mitigates risks and potentially reduces claims.

Challenges in public-private collaboration

Despite these efforts, several challenges remain: 

Trust and engagement:

Building trust among insurers, public authorities, and communities is challenging. Success depends on identifying and connecting with the right stakeholders and building mutual trust and shared interests. For instance, the survey in Croatia was sent through the Croatian Chamber of Agriculture and received around 1,000 responses, while a similar survey in Bavaria had much fewer (69 answers). This highlights the need for effective intermediaries and targeted engagement strategies.

Complex coordination:

Coordinating among various sectors and stakeholders can be challenging and requires careful planning and communication.

Regulatory and financial incentives:

Regulatory incentives in Europe may not be strong enough to drive significant changes, and the financial benefits for insurers can appear distant. Understanding the determinants of profit — including regulatory aspects and risk management opportunities — is crucial for identifying areas where risks can be mitigated effectively.

Strategies for overcoming challenges

Strengthening communication and relationships:

Building relationships with key stakeholders through targeted engagement and small working groups can help establish trust. 

Effective communication channels:

Use or join channels that are tailored to the specific needs of different groups, such as farmers’ unions or public authorities.

Listening to those with on-the-ground expertise:

Engage with farmers, local administrators, and environmental experts to gain valuable insights.

Adapting to local contexts:

Timing and cultural sensitivity are essential. For example, avoiding outreach to farmers during harvest season can lead to more productive engagement. Building close relationships and using inclusive language are also important for enhancing collaboration.

Conclusion: 

Aligning public and private interests in the insurance sector presents challenges, but the potential benefits are considerable. Effective collaboration can lead to innovative insurance solutions that benefit both insurers and communities. For insurers, this alignment may improve risk management, increase the purchase of insurance products and develop new markets. For communities, this translates into tailored products and services that address their specific vulnerabilities and ultimately make them better protected and resilient. By fostering trust, breaking down barriers, and understanding the needs of all stakeholders, we can develop innovative insurance solutions that not only provide security but also contribute to building resilient communities.