Increased wildfires across France, Spain and Greece are putting pressure on European insurance firms, exposing the ‘narrow margins in high-risk property coverage’, according to new analysis from GlobalData.
According to GlobalData‘s Global Insurance Database, natural fire and hazard premiums totalled $2.4 billion in France in 2024, while claims reached $2.2 billion, a difference of approximately $218 million.
Given that wildfires are on the increase – with several significant fires reported this summer, and major cities such as Bordeaux coming under threat – these thin margins highlight the challenges insurers face as severe weather events become more frequent, it noted.
‘Extremely concerned’
“It is yet more evidence that insurers around the world should be extremely concerned by climate change and the impact of severe weather events,” commented Ben Carey-Evans, senior insurance analyst at GlobalData.
“A GlobalData poll on Verdict Media sites in May 2024 found that 25.0% of respondents believed severe weather events to be the greatest risk to the insurance industry, which placed it second behind cyber threat. While this is a couple of years old, severe weather events is only more of an issue now and it highlights how it has been a key concern for insurers over a long period of time.”
Compensation scheme
According to GlobalData, France’s state-backed compensation scheme does not cover wildfires, focusing instead on floods and droughts, meaning much of the burden associated with the current fires will fall on insurers.
Should these wildfires continue, it suggests, insurers may be forced to withdraw personal and commercial coverage from areas considered particularly vulnerable to climate-related events.
“The long-term risk here is that insurers pull away from personal and commercial policies in high-risk areas and large areas of land and population become uninsurable,” Carey-Evans added.
“This is one of the most-pressing issues in insurance, with more serious events becoming increasingly likely every year. Insurers and governments will need to work out how they can continue to insure increasingly large areas, with many communities and businesses at risk.” Read more here.
