Parametric Insurance for Sustainable Disaster Risk Finance: Legal, Data, and Governance Pathways in Slovenia and Croatia

Disasters caused by natural hazards, including the August 2023 floods in Slovenia and the 2020 earthquakes in Croatia, resulted in a combined damage and loss of about EUR 26 billion. Indemnity insurance covered only a small share, shifting recovery to public budgets. This review examines whether parametric insurance can provide transparent, pre-arranged, and auditable post-event liquidity to smooth public finances and support timely recovery. A structured qualitative review of peer-reviewed studies, supervisory materials, and EU and national law assesses data readiness, enforceability, and consumer protection duties. EU rules address parts of prudential and conduct risk. However, gaps persist in trigger verification, automated execution, and in the treatment of third-party trigger data sources and calculation methodologies documented for supervisory reviews and audits (no published parametric-specific accreditation standards). The core gap reflects the low take-up of catastrophe insurance rather than a low overall insurance penetration. Parametric cover is treated strictly as a complement to indemnity insurance. We outline narrowly scoped pilots using verifiable, publicly sourced triggers, version-controlled calculations, pre-tested basis risk disclosures, and reversible, auditable settlements with human oversight. Parametric designs add value only when verifiable triggers, transparent disclosures, and supervisory audits are embedded ex ante.