economy
Wildfire costs are surging
Insurers warn that Europe is facing a "protection gap" in wildfire cover as disaster recovery costs outpace insurance coverage.
TL;DR
- Wildfires, heatwaves, and extreme weather are common in European summers.
- Insurers warn of a growing "protection gap" where disaster recovery costs surpass insurance coverage.
- Recent wildfires in France, Spain, and Greece have destroyed vast areas and impacted local economies.
- Extreme heatwaves have led to red alerts and drought conditions.
- Zurich Insurance CEO Mario Greco stated that all weather risks are insurable but increasingly expensive to manage.
- Greco emphasized the need for systemic intervention to prevent and mitigate wildfires, which countries are often unprepared to implement.
- Extreme weather incurs significant costs for cooling, healthcare, infrastructure, transportation, and agriculture.
- Insurance payouts for wildfires in the 2010s were six times higher than in the 2000s.
- The Los Angeles wildfires in 2025 were the costliest globally, with insured losses of $40 billion.
- Total wildfire and heatwave costs for five Eurozone countries up to July reached $3.5 billion.
- Swiss Re's CFO Anders Malmström noted a significant protection gap in Europe, with much wealth uninsured against natural catastrophes.
- Increased wealth accumulation in exposed areas combined with more frequent, high-impact events escalates overall societal risk.
- Zurich Insurance has a Resilient Solutions unit to help customers with prevention and mitigation strategies.
- Insurers aim to provide liquidity and backstop countries during times of distress.
- Zurich Insurance and Munich Re reported limited exposure to current European wildfires.