Climate change is turning parts of Europe into an insurance nightmare

BRUSSELS — As wildfires menaced the outer suburbs of Bordeaux and Madrid this week, Europe once more faced an uncomfortable reality: a rapidly warming planet threatens to make parts of the continent uninsurable. The record-breaking blazes — which have forced hundreds of thousands to flee their homes, destroyed wildlife and threatened cities once thought immune to wildfire — are the latest in a series of climate-related natural disasters that are forcing policymakers to rethink how to handle the risk. The answer, increasingly, is a brutal one: Either governments step in to protect citizens from soaring insurance premiums, straining public budgets; or people face being left with no protection at all when their homes are flooded or burn down. The growing risk has prompted the European Central Bank and EU insurance regulator to call on Brussels to take a more active role by setting up an EU-level reinsurance scheme and a public natural disaster fund. “What’s happening in Europe this summer isn’t unique,” deputy governor of the Bank of France Agnès Bénassy-Quéré said. “These heatwaves and forest fires are part of a marked global increase in extreme weather events that imposes real costs on households, businesses, and governments,” she said. Wildfires are “the fastest-growing weather peril globally,” even if they have “so far contributed only a relatively small share of insured losses in Europe,” said Nikhil da Victoria Lobo, who leads reinsurance giant Swiss Re’s Property & Casualty Reinsurance business for western and southern Europe, the Middle East and Africa. Extreme weather events already cost a fortune in repairs for Europe’s cash-strapped governments. Data from the European Environment Agency shows weather-related extremes cost the EU economy over €200 billion in economic losses between 2021 and 2024. Insurance firms, meanwhile, are hiking their prices and even pulling out of certain at-risk areas, leaving governments and individuals to bear the cost of uninsured losses. “In Europe, 75 percent of the damages related to natural disasters are not insured,” said Ariel Le Bourdonnec, a campaigner working on insurance at the NGO Reclaim Finance, citing data from the European Insurance and Occupational Pensions Authority. For insurers, flooding and storms are the most costly natural disasters, followed by extreme heat and wildfires, according to Insurance Europe. Experts predict it’s only going to get worse. As fossil fuel use continues to increase globally, temperatures are rising at an unprecedented rate, disrupting the planet’s climate and ecosystems. Global warming causes more weather extremes like wildfires, floods and droughts. “Insured wildfire losses in Europe have increased by an estimated 8 to 11 percent per year in real terms since 1970,” added SwissRe’s da Victoria Lobo. Damages pile up In France, where a massive wildfire still burns in the south-west Gironde and Landes departments, the government has promised that insurance companies will cover the accommodation costs and the damages for over 200,000 people who have been evacuated. Firefighters work to suppress a fire burning near Arès in the Gironde area of France on July 28, 2026. | Pool photo by Baz Ratner via AFP/Getty Images At least 240 homes have been lost in the fire so far. Wildfires are covered by home insurance, and the government has promised to streamline the process, meaning most of the victims should receive money to rebuild their houses. “Insurers are playing the game,” Industry Minister Sébastien Martin told RMC on Tuesday. But wildfires will also have a direct impact on France’s already strained public finances for reforestation, reconstruction and for unemployment benefits paid to companies that have been forced to put their activities on hold. In the Gironde department, around 130,000 workers are currently unable to work because of the wildfires, and 13,000 businesses have been evacuated. Martin ruled out a massive