Europe’s insurers are bracing for a new era of catastrophe risk fanned by rising temperatures in the world’s fastest-warming continent.
Insurers, reinsurers and brokers contacted by Bloomberg are already predicting increased premiums and bigger losses tied to natural catastrophes. Import
antly, they don’t see the latest bouts of extreme heat as a temporary shock, but as a long-term trend.
The industry is “actively evaluating” the extent to which the rise in temperatures “represents a fundamental shift in Europe’s catastrophe risk landscap
e,” said Will Bruce, global head of climate risk consulting for Aon Plc, the world’s second-largest insurance broker.
Read more: France and Spain Plan Economic Aid as Major Fires Still Burn
Efforts are also underway to expand the “range of capital available to support resilience and recovery,” he said. That may require transferring more risk
to the capital markets, “including catastrophe bonds and other insurance-linked securities.”
As Europeans struggle to adapt to a much hotter world than the one inhabited by their parents, they’re trying to comprehend not just a different physical rea
lity, but also the financial burden that will likely accompany it. Munich Re says it’s now clear that the c
ombined forces of El Niño and global warming have produced a “dangerous mix” that will drive up losses in the second half of this year.
Wildfires — exacerbated by climate change — have already ravaged Spain, France and Greece. Even corners of Europe that used to consider themselves to
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o far north to be at risk are now finding they’re affected. European forecasts show “very high” fire danger through early August reaching as far north as Scandinavia. In th
e UK, a large wildfire broke out close to a nuclear power station, as drought conditions were declared for London and half of England.
AXA SA CEO Thomas Buberl said the French insurer is still trying to assess the impact of the fires as they continue to rage.
“We have to live with the fact that these fires are happening more and more,” Buberl said in an interview on Bloomberg Television on Friday. “This is part of climate change, this is part of our daily reality now.”
What is already clear is that wildfire losses extend well beyond damage to property, said Tyson Vickery, managing director and global placement leader f
or Europe at Marsh, the world’s largest insurance and risk-advisory broker.
“Business interruption caused by evacuation orders, smoke or restricted access can create significant losses even where there is limited or no physical damage,” he said.
And while it’s too early to say what the cost of this year’s wildfires will be, Vickery notes that Spai
n’s 2025 wildfire season resulted in close to €5 billion in economic losses, of which only €1 billion was insured.
Allianz SE, Europe’s largest primary insurer, says heat is altering risk patterns in the region as temperatures rise twice as fast as in the rest of the world.
