European Wildfires Expose Growing Insurance Protection Gap

European summers now bring wildfires and heatwaves. These extreme events are permanent. Insurers warn of a growing protection gap.

A massive wildfire ravaged France and Spain. It destroyed over 300,000 acres since July. Greece also suffered fires with 100 km per hour winds.

Temperatures exceeded 104 degrees Fahrenheit. Heatwaves triggered red alerts and drought warnings. The region faces threat-to-life warnings.

European insurance companies spoke to CNBC. They said the region is not prepared. A substantial share of damage remains uninsured.

Wildfire Costs and Insurance Losses

Zurich Insurance CEO Mario Greco stated all weather risks are insurable. But costs are increasing. "Wildfires can be prevented, can be mitigated, but they require systemic intervention," Greco told CNBC's "Squawk Box Europe."

Greco noted local governments are not ready. They do not visualize the risk. "The risk is there," he said.

Extreme weather drags on fiscal budgets. Costs hit cooling, healthcare and infrastructure. Agriculture and transportation also suffer.

Insurance payouts for wildfires rose sharply. Companies paid $56.3 billion in the 2010s. That is six times more than the 2000s.

European Protection Gap

The LA wildfires cost Munich Re and Hannover Re $1.9 billion. Those fires hit wealthy American residents. The Swiss Re Institute called them the costliest wildfire event at $40 billion.

European wildfire costs reached 3.1 billion euros through July. This covers Greece, Spain, Portugal and Romania. The average annual EU impact is 2.5 billion euros.

Swiss Re CFO Anders Malmström addressed the protection gap. "There is still a protection gap, particularly in Europe," he said. Much of European wealth remains uninsured against catastrophes.

Malmström explained the risk exposure increased. More wealth accumulated in exposed areas. Houses became more expensive.

"More events with a higher kind of impact," Malmström said. "At the same time, you have more that you need to protect in these areas." The risk increases overall for society.

Zurich Insurance created Resilient Solutions. The unit helps customers with prevention and mitigation. It addresses cybersecurity and climate change.