Europe's Insurers Face Wildfire Losses Amid Rising Climate Risks
Europe's worst wildfire season in recent history is putting pressure on domestic insurers to absorb significant losses, which could total between €10 billion and €15 billion ($11.5 billion to $17.3 billion).
Fires have ravaged France, Spain, and Greece, forcing evacuations of over 220,000 people in France alone.
Marcos Alvarez, managing director at Morningstar DBRS, warned that wildfires could pose a significant threat to the industry if they reach densely populated areas, citing Bordeaux as an example.
Private insurers will likely bear the brunt of the losses, as wildfires are not covered by France's state-backed natural disaster compensation scheme.
The European Central Bank and the EU's insurance regulator have highlighted Europe's 'protection gap' - the difference between total losses from disasters and insured amounts - which currently stands at around 75%.