Europe’s wildfires could cost France up to $17B, exposing climate insurance gap

Europe's worst wildfire season in recent history is forcing a reckoning across the insurance industry, as record-breaking blazes in France, Spain, and Greece widen the gap between climate-driven losses and available coverage. The crisis is reverberating beyond Europe, with similar insurance retreats emerging in markets like New Zealand, where forestry fire protection is declining even as global wildfire risk intensifies.

France Faces Record Losses

Authorities evacuated approximately 220,000 people in southwestern France as unprecedented wildfires burned through the Gironde and Landes regions in late July, in what CNN described as France's biggest peacetime evacuation since World War II. The blaze, which started near the Cap Ferret peninsula on July 23, advanced to within 15 kilometers of Bordeaux before firefighters brought it under control.youtube+2

France's total losses could reach €10 billion to €15 billion, with insured losses running into several billion euros, according to Morningstar DBRS ↗ 2.61%. While manageable for the industry, the fires could become France's costliest wildfire event on record. "This might be a real threat to the industry if you have a wildfire out of control, reaching a medium-sized city like Bordeaux," said Marcos Alvarez, managing director at Morningstar DBRS. "That is a completely different scale of losses."insurancejournal

Unlike floods and droughts, wildfires are not covered by France's state-backed natural disaster compensation scheme, leaving private insurers to shoulder most of the recovery costs.insurancejournal

A Continental Protection Gap

The fires have intensified scrutiny of Europe's "protection gap." Only 25 percent of losses from climate-related catastrophes between 1980 and 2024 were insured across Europe, according to the European Central Bank and the EU's insurance regulator. Politico reported that the European Central Bank and EU insurance regulators have called on Brussels to establish an EU-level reinsurance scheme and a public natural disaster fund.eenews+2

Swiss Re ↘ 0.35% noted that wildfire has not yet generated a single billion-dollar insured loss event anywhere on the European continent, despite severe fire seasons in Spain, Italy, and Greece — not because the fires are small, but because so little damage is insured. Munich Re Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft data shows Europe accounted for just 5 percent of the €173 billion in global wildfire losses from 2016 to 2025.insurancejournal+1

Global Retreat From Fire Risk

The pattern extends beyond Europe. In New Zealand, the Forestry Owners Association has warned that 200,000 hectares of commercial plantation forest have exited the insured fire pool, while annual fire protection expenditure by large-scale forest owners has fallen 27 percent since 2022. Radio New Zealand reported that the retreat comes even as wildfire risk grows globally.insurancebusinessmag+2

Industry groups are sounding alarms. The Global Asia Insurance Partnership published a report urging the sector to adopt integrated risk intelligence and adaptive product design to avoid what it calls an "insurability tipping point". AXA's ↘ 1.37% climate unit projected in July that areas around French cities could see nearly 70 percent more high-risk wildfire days per year by 2050.insuranceasianews+2

Household premiums in higher-risk French areas are likely to rise when policies come up for renewal in January, according to Rodolphe Mann, head of France at insurance broker Miller. The question now facing policymakers is whether governments will step in before more communities find themselves priced out of protection entirely.insurancejournal