European regulators say wildfire losses are widening the insurance gap and pushing more costs onto governments.
Why it matters: Households, businesses and municipalities are first in line when wildfire damage is underinsured. That can slow rebuilding, strain local budgets and raise costs for lenders and insurers.
- EIOPA and the European Stability Mechanism said about 75% of natural-catastrophe losses in Europe have historically been uninsured.
- The European Commission said most EU countries do not require mandatory insurance for natural catastrophes.
- EIOPA said Greece has a particularly high protection gap for earthquake and wildfire risk.
- Swiss Re said closing protection gaps will require better risk modelling, adaptation measures and public-private coordination.
European regulators and insurers are warning that wildfire losses are exposing a widening insurance protection gap across the continent, with more of the recovery bill landing on households, businesses and municipalities.
The European Commission said wildfire risk is intensifying across southern Europe and spreading into parts of central, eastern and northwestern Europe. In a March update, the Commission also said most EU countries do not require mandatory insurance for natural catastrophes, leaving many losses outside private cover. European Commission
EIOPA and the European Stability Mechanism said in April that around 75% of economic losses from natural catastrophes in Europe have historically been uninsured. Their joint paper proposed a public-private risk-sharing mechanism to help narrow the gap. EIOPA and ESM
The regulatory concern is not abstract. In June, EIOPA said Greece has a particularly high protection gap for earthquake and wildfire risk, showing how coverage can lag in places with the most exposure. EIOPA
Private-sector reinsurers are making the same point. Swiss Re said adaptation and insurance need to work together to narrow protection gaps, while Munich Re has said wildfires and bushfires remain a major natural-catastrophe risk area. Swiss Re Munich Re
For readers, the policy question is immediate: if wildfire losses continue to rise faster than coverage, the costs move to owners, local governments, lenders and taxpayers unless insurers, governments and property owners share more of the risk.
By the numbers
- 75% - share of natural-catastrophe losses in Europe that have historically been uninsured, according to EIOPA and the ESM.
- Most EU countries - do not require mandatory insurance for natural catastrophes, according to the European Commission.
- Greece - identified by EIOPA as having a particularly high protection gap for earthquake and wildfire risk.
Yes, but: The 75% figure refers to natural-catastrophe losses overall, not wildfire losses alone.
What's next: EIOPA and the ESM have proposed a public-private risk-sharing mechanism, but no EU-wide mandatory insurance policy is cited in the dossier.