European Insurers Increasingly Focus on Flood, Storm Risk as Climate Change Impacts Grow
European insurers and reinsurers are shifting their focus to quantifying risks from perils like flood and severe convective storms, as these events increasingly drive insured losses across the continent, according to analysis released today.
Historically, reinsurance and capital requirements in Europe have centered on windstorms in Northern Europe and earthquakes in the Mediterranean. However, a review of catastrophe losses exceeding $100 million over the past 12 years reveals a different picture: between 2021 and 2024, approximately $70 billion in insured losses (indexed to 2025) were attributed to flood ($28 billion) and severe convective storms ($22 billion). The 2023 earthquakes in Turkey and Morocco served as stark reminders of seismic risk, but higher-frequency events are now dominating the loss landscape. This shift is particularly critical as insurers retain more risk following the 2023 renewal season.
Wildfires are also becoming a significant concern, with Spain experiencing its worst wildfires in 30 years this year, burning nearly four times the average annual area. While climate change is a factor, unmanaged forest land exacerbates the problem. Guy Carpenter is helping clients assess these evolving risks through tools like their global multiperil risk ratings and a proprietary Model Suitability Analysis (MSA) framework. “Consistently quantifying risk across perils globally is becoming vital to manage risk and adapt business strategies,” stated Matthew Eagle, Head of Global Model Solutions and Advisory. Understanding these risks is crucial for maintaining financial stability in a changing climate; the European Environment Agency provides further data on climate change impacts in Europe.
The firm is also looking ahead, quantifying how peril risk will change under future global warming scenarios to support regulatory stress tests and inform long-term strategies. In Italy, for example, Guy Carpenter’s earthquake and flood risk data has aided clients in managing portfolio risk under the new national catastrophe law. Francois Dagneau, Head of Analytics for Continental Europe, emphasized the importance of resilience and sustainable insurance practices in this evolving landscape. You can learn more about Guy Carpenter’s risk modeling solutions on their website.
Officials at Guy Carpenter indicated they will continue to refine their modeling capabilities and collaborate with the reinsurance market to ensure broad adoption of updated risk assessments.
