Major insurers warn Europe’s wildfire protection gap is widening

As wildfires rage across two continents this summer, the insurance industry is sounding alarms about a widening gap between the cost of disaster recovery and the coverage available to protect homes and businesses. In Europe, where 75% of natural catastrophe damages go uninsured, major insurers say the continent is dangerously unprepared for what is becoming a permanent feature of its climate.

European Insurers Warn of Mounting Risk

Zurich Insurance Group CEO Mario Greco told CNBC on Thursday that wildfires require "systemic intervention" that European governments have been slow to undertake. "They don't really visualize, they don't feel the risk yet, but the risk is there," Greco said. His comments came as a wildfire that began in July has destroyed over 300,000 acres across parts of France and Spain, with Greece also battling blazes worsened by winds reaching 100 km per hour.cnbc

Swiss Re ↗ 0.17% Chief Financial Officer Anders Malmström said the combination of more frequent extreme weather events and growing wealth in exposed areas is compounding the problem. "There is still a protection gap, particularly in Europe, which means there's a lot of wealth here, but it's not protected through insurance," he said on CNBC Thursday.cnbc

Insurance companies paid out $56.3 billion in wildfire losses during the 2010s — six times the $8.7 billion paid in the prior decade, according to Allianz Commercial. Swiss Re has called wildfire "the fastest-growing weather peril globally," with insured losses climbing roughly 12% annually since 1970. The Financial Times estimated that wildfire and heatwave costs through July reached 3.1 billion euros for the five most-exposed Eurozone countries, above the EU's average annual impact estimate of 2.5 billion euros.finance.yahoo+1

Spokane Fires Add Pressure in the U.S.

Across the Atlantic, the Spokane Complex wildfires that ignited on August 1 have destroyed more than 700 structures and forced roughly 60,000 residents to evacuate. Gallagher Re estimated insured losses could reach the billions, potentially making it the costliest wildfire event in Washington state history. Cotality data identified over 50,000 properties in the Spokane area carrying moderate or greater wildfire risk, with a combined reconstruction cost value exceeding $21 billion.reuters+2

Officials and consumer advocates fear the event could trigger property insurance rate hikes and policy cancellations in the region, according to Stateline. Washington's Office of the Insurance Commissioner dispatched staff to a disaster assistance center in Spokane this week to help residents navigate insurance claims.stateline+1

A Global Pattern Emerges

Munich Re Chief Financial Officer Andrew Buchanan said insurers can help "liquidity to flow in times of distress," but stressed the broader societal dimension of the crisis. Both Munich Re and Zurich Insurance said their own exposure to the European wildfires remains limited.cnbc

The European Central Bank and the EU's insurance regulator have called on Brussels to establish an EU-level reinsurance scheme and a public natural disaster fund to address the protection gap. Without such action, the pattern appears set to intensify — more assets accumulating in fire-prone areas, more severe fire seasons, and a growing share of losses left uninsured.politico