European Wildfires to Boost Insurance Demand, Swiss Re Says

Global reinsurance giant Swiss Re (SIX:SRENH) said on Tuesday that the severe wildfires currently affecting France and Spain are likely to fuel greater demand for insurance coverage in the region.

The company highlighted a key vulnerability in southern Europe, where wildfire losses are often not covered by national insurance pools, creating a significant protection gap for property owners.

Coverage Gaps Drive Demand

According to Balz Grollimund, Swiss Re's Head of Catastrophe Perils, homeowners in many parts of southern Europe must seek private insurance policies to protect against wildfire damage. This differs from other perils that may be covered by broader national schemes, leading to varied levels of protection across the region.

The ongoing fires are expected to draw attention to these gaps, prompting more property owners to purchase specific coverage. Swiss Re noted, however, that it is still too early to estimate the total insured losses from the current events or any potential impact on the company's own results.

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A Fast-Growing Global Peril

Wildfires represent the fastest-growing weather-related peril for the global insurance industry. Grollimund stated that insured losses from wildfires have increased by approximately 12% annually in real terms since 1970.

He attributed this trend to climate change, which is making conditions conducive to wildfires more frequent, particularly in southwestern Europe. This escalating risk underscores the growing importance of accurate risk assessment for European wildfires for insurers and reinsurers alike.