Analysis-Europe’s heatwaves expose insurance gap as business losses mount

Europe's heatwaves have exposed a significant gap in insurance coverage, as extreme temperatures are causing mounting losses for businesses without adequate protection. The hospitality industry in Italy, for example, has seen a decline in turnover, with over 80% of businesses reporting a 20% reduction in sales during recent heatwaves.

This decline has strained the margins of these businesses, as air-conditioning usage increases and traditional aperitivo outdoor seating becomes less viable. Insurers face challenges in covering such indirect operational disruptions, as heat-related losses often do not stem from physical damage but rather from productivity losses and increased operational costs.

A 2023 survey found that only 28% of small and medium-sized firms in Europe held business interruption cover as part of their property insurance, while 17% had non-damage business interruption protection. As the economic costs of extreme heat continue to rise, the protection gap is widening, posing a growing risk for European businesses.

Brief written by urgent.news from Investing.com's own syndicated text. Machine-written — may contain errors; check the original before relying on it.