Europe’s wildfire ‘protection gap’ is growing, insurers warn
Insurers warn that Europe is facing a "protection gap" in wildfire cover as disaster recovery costs outpace insurance coverage.
As Europe grapples with increasingly common wildfires, heatwaves, and extreme weather, insurers are sounding the alarm on a growing "protection gap." The region has seen a massive blaze in France and Spain, as well as a catastrophic wildfire fueled by 100 mph winds in Greece, accompanied by sweltering heatwaves that have prompted red alerts and drought warnings.
Insurers contend that the financial impact of these disasters is far outpacing the insurance coverage available in Europe. Zurich Insurance Group's CEO Mario Greco contends that while all weather risks are insurable, the costs have become prohibitively high due to a lack of systemic intervention. Greco called for governments to take proactive measures to mitigate these risks.
Insurance payouts for wildfires have surged six-fold in the 2010s, reaching $56.3 billion, compared to $8.7 billion in the 2000s. The sectors most affected include utilities, real estate, construction, agriculture, and transportation. The Los Angeles wildfires of January 2024, for instance, caused a combined $1.9 billion in insured losses.
Swiss Re Institute estimates that the combined cost of wildfires and heatwaves in Europe, as of the end of July, reached €3.1 billion ($3.5 billion), with the five Eurozone countries most at risk—Greece, Spain, Portugal, and Romania—accounting for a significant portion of that total. Zurich Insurance's Greco emphasized the need for countries and local authorities to accept responsibility for risk assessment, mitigation, and pricing to ensure insurance can cover the residual risk.
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