As Europe continues to feel the effects of the latest heatwave there are warnings that the impact on the continent’s life and health  insurers may be profound.

Rating agency Standard & Poor’s has published its latest insurance brief, Heatwaves Increase Excess Mortality In Europe, at a time when heatwaves are becoming one of Europe’s deadliest climate risks, with the continent warming at roughly twice the global average rate.

It has led to tens of thousands of additional deaths being recorded during this summer’s various heatwaves and reflects a broader and persistent increase in heat-related excess mortality.

The extreme heatwaves in Europe have coincided with rapidly ageing populations. Since elderly people are particularly vulnerable to heat stress, heat-related mortality in Europe is likely to rise. The implications of high temperatures and demographic aging might become increasingly relevant for life and health insurers and reinsurers.

“We estimate that the effects of this summer’s heatwaves–including excess mortality and the deterioration of existing health conditions–affect European re/insurers’ financials, but not to an extent that would affect ratings,” S&P Global Ratings credit analyst Volker Kudszus said.

However, the rating implications of heatwaves could increase over the medium to long term as extreme summer temperatures become more frequent and intense and Europe’s population continues to age. We will continue to monitor their impact on the performance of rated re/insurers.

“We expect that insurers will develop action plans over the next few years and that they will contribute to overall resilience measures by supporting loss-prevention initiatives and raising policyholders’ awareness of heat-related health risks,” Kudszus added.

The report explained that between 2004 and 2024, the share of people aged 65 and over in the EU increased to 21.6% from 16.4%, while the proportion of those aged 80 and over rose to 6.1% from 3.8%.

Over the same period, the share of young people reduced, with the proportion of those under 19 declining to 20.0% from 22.4% and the share of those under 15 decreasing to 14.6% from 16.2%. The increasing share of elderly people – who are particularly vulnerable to heat stress–suggests that heat-related mortality in Europe is likely to rise.

“The extreme heatwaves are affecting the insurance sector,” it added. “While non-life primary insurers and reinsurers face rising drought –  and wildfire-related claims, primary life and health re/insurers must handle more mortality claims and increased demand for medical services. And because heatwaves can affect large geographic regions and may persist over weeks, accumulation and systemic risks also rise.”

It added the heatwaves, including excess mortality and the deterioration of existing health conditions, will affect European re/insurers’ financials, but not to an extent that would affect ratings.

“That said, the rating implications of heatwaves could increase over the medium to long term as extreme summer temperatures become more frequent and intense and Europe’s population continues to age. We will continue to monitor their impact on the performance of rated re/insurers,” it concluded. “Overall, we think European life re/insurers are well positioned to assess and manage these risks. We expect that insurers will develop action plans over the next few years and that they will contribute to overall resilience measures by supporting loss-prevention initiatives and raising policyholders’ awareness of heat-related health risks.”

The report explained that between 2004 and 2024, the share of people aged 65 and over in the EU increased to 21.6% from 16.4%, while the proportion of those aged 80 and over rose to 6.1% from 3.8%.