Europe's heatwaves expose insurance gap as business losses mount

Business Recorder reported that Europe's repeated heatwaves are inflicting heavy economic losses while insurance payouts remain minimal. Moody's estimated that last summer's heat episodes cost €43 billion ($50 billion) in lost economic output, yet generated only about €500 million in insured payouts. Heat often falls outside standard business interruption cover, because the losses stem from disrupted operations rather than property damage.

In Padua, Italy, cafes have seen the traditional early evening aperitivo slot largely disappear as customers seek indoor air-conditioning. A survey of roughly 600 operators in Padua and the surrounding province found that over 80% saw takings fall by around 20% during the recent heatwave. Marsh's Swenja Surminski noted that heat is not usually treated as an insurable risk, since it seldom produces the physical damage that floods or storms cause, although its operational fallout can be just as serious.

Insurers are exploring parametric products that pay out automatically once temperatures pass preset thresholds, avoiding a lengthy loss assessment. KBV Research projects the European parametric insurance market could hit $7.93 billion by 2031. Surminski urged companies to adapt operations, such as investing in cooling and stress-testing supply chains, rather than waiting for losses to occur.