July 21 will go down in the history of the European Union as a landmark date.
Following fierce contrasts in the early months of the Covid-19 crisis, the agreement reached by Member States on the recovery package was ultimately more ambitious than previously thought possible, from a political point of view.
Together, the unprecedented decision to suspend the Stability and Growth Pact, the perfectly-timed intervention of the ECB and, finally, the scale of the Recovery Fund marked a first important step towards a common fiscal policy.
And although a powerful and permanent joint fiscal approach is still distant, securing European solidarity through a significant amount of grants is certainly a welcoming political signal that Europe is still there to help in times of crisis.
Now, it is about ensuring that the money is available in the shortest time possible and it is spent: this enormous firepower should be conditional on wise investment decisions that can create growth and jobs. In the months and years to come, we shall all – governments, public institutions, private companies – move in synergy towards two goals: the relaunch of the European economy and the development of Europe’s future resilience.
With its €11 trillion of assets under management – and Generali alone accounting for over €630 billion – the European insurance industry has an important role to play in the relaunch of the European economy. Our sector can help manage the risks and transfer funds to individuals and businesses when unexpected crises like Covid-19 strike, and it can support the economic recovery by enabling capital to flow into investments and lending practices. At Generali, we firmly believe that sustainability should be at the heart of the recovery effort.
The ambitious goals of the European Green Deal, which aims to make Europe the first climate-neutral continent by 2050, need to be pursued with even greater commitment in light of this pandemic.
This crisis can be the catalyst for a new impetus towards building and modernising infrastructures, driving companies towards greener practices or productions and investing in sectors that shall make the EU both more technologically advanced and sustainable.
With this in mind, we are currently developing a long-term investment program with the aim of contributing to the sustainable economic recovery of key European countries in which we operate. This shall happen by investing in sectors such as digital, green mobility and sustainable living, fuelling growth and supporting enterprises that share our idea of responsible leadership to create a more sustainable world. These are different initiatives that can be integrated into an ambitious industrial strategy in Europe.
As we strive to relaunch our economies, we must also work to make the whole system more resilient and better equipped to face the next systemic crisis. One of the lessons we learned this year is that Europe – and more broadly the whole world – was not prepared for a pandemic. Therefore, it is vital to ensure a better coordination of health policies, cross-border movement of people and goods, and faster intervention and compensation capabilities.
This is another key topic where the insurance industry can play an important role to find viable and sustainable solutions. As an example, thousands of small and medium enterprises all across Europe were seriously undermined by the lockdown measures imposed by governments in the past months.
In many countries, this sparked an intense debate as to how to cover their losses caused by the business interruption. The great uncertainty that still remains around it shows once more that events of this magnitude go way beyond the traditional rules regulating the insurability of risks.
Quite simply, it would be impossible for the insurance and reinsurance industry to fully cover all the losses deriving from them, and this is why a public-private partnership in this context is key. We may consider a traditional insurance scheme or endorse innovative solutions such as pandemic bonds or, as we are doing, the issue of a pandemic pool, which could provide a concrete, harmonised solution to a complex problem at European level. What we have in mind is a multi-layered insurance coverage, where the private sector, national governments and European institutions coordinate protection and recovery measures. We have started discussing this idea with EIOPA, the European Commission and the industry.
This is a Hamiltonian moment for Europe, a unique opportunity to write a page of history and reshape the economic system in a sustainable direction. We all need to work together to relaunch the European economy and to build Europe’s future resilience. At Generali, we are ready to step up to this immense challenge, bringing our expertise as a long-term investor to help governments make investments that can be the engine of Europe’s economic and social growth.