European insurers are facing mounting losses as severe wildfires sweep across France, Spain and Greece, exposing the narrow margins in high-risk property coverage.

France’s 2024 fire and hazard insurance data show how quickly claims can approach premiums, raising concerns over insurers’ capacity to absorb escalating climate-related losses and maintain coverage in increasingly vulnerable regions, reveals GlobalData, a leading intelligence and productivity platform.

As wildfires rage across the continent, Intelligence and productivity platform GlobalData’s Global Insurance Database shows that natural fire and hazard premiums totalled $2.4 billion in France in 2024 with claims at $2.2 billion; a difference of just $218 million. It added this highlights how thin the margins can be in this high-risk line and illustrates how difficult 2026 will be for insurers.

The wildfires are still ongoing in France and could get considerably worse if they get even closer to cities such as Bordeaux, where they have already caused a great deal of disruption.

Ben Carey-Evans, senior insurance analyst at GlobalData, explained: “It is yet more evidence that insurers around the world should be extremely concerned by climate change and the impact of severe weather events. A GlobalData poll on Verdict Media sites in May 2024 found that 25.0% of respondents believed severe weather events to be the greatest risk to the insurance industry, which placed it second behind cyber threat. While this is a couple of years old, severe weather events is only more of an issue now and it highlights how it has been a key concern for insurers over a long period of time.”

Reportedly, wildfires in France are not covered by its state-backed compensation scheme – which only covers floods and droughts. Therefore, all the burden will fall on insurers.

Carey-Evans concluded: “The long-term risk here is that insurers pull away from personal and commercial policies in high-risk areas and large areas of land and population become uninsurable.

“This is one of the most-pressing issues in insurance, with more serious events becoming increasingly likely every year. Insurers and governments will need to work out how they can continue to insure increasingly large areas, with many communities and businesses at risk.”

In the UK the government took the unprecedented step to issue a national alert on wildfire risk on the country’s mobile networks amid fears that the country is close to being overwhelmed by the scale and extent of wildfires as the weekend saw homes across the West Midlands destroyed.

Dr Rory Hadden, Rushbrook senior lecturer in Fire Investigation, at the University of Edinburgh, said: “Globally it is very common for wildfires to spread to houses and communities.  These disasters change a wildfire into an urban conflagration – unfortunately we see these regularly in many parts of the world.  These urban conflagrations are extremely destructive and place huge pressure on fire services.  In the UK we have seen houses being impacted by wildfires before perhaps most notably in Wennington during the 2022 heatwave.  Unfortunately, this is a hazard that seems to be becoming more common.”

He added: “Fires in structures and outdoor or wildfires are very different.  They require different firefighting techniques.  The challenge with a wildfire is that it moves across a landscape relatively quickly.  The fire and rescue service are very well trained to extinguish structure fires, but this becomes more challenging as their resources are stretched responding to wildfires.  The UK is developing increasing capability in fighting wildfires.  However, as with considering fire safety in homes, preparation, planning and preparedness is key.  We need to be thinking how we manage landscapes to make them resilient to wildfires under future climate and land use.

“As a country, with the projections for climate change we will see more wildfires and so we need to be prepared for these.  It seems that the situation is changing faster and faster.”