Europe's heatwaves could push insurance premiums higher as heat deaths and illness claims rise

Europe's heatwaves may have consequences that extend well beyond broken temperature records.

As losses tied to wildfire, drought, heat-linked deaths, and worsening illnesses grow, insurers could end up passing more of those costs on to policyholders.

S&P has flagged that risk, saying that hotter European summers are adding to the pressure on insurers' finances and could, over time, contribute to higher customer premiums.

Here's what to know

According to The Guardian, S&P said extended bouts of extreme heat in Europe are expected to raise claims across several lines of business. The agency pointed not only to property losses associated with drought and wildfire, but also to added strain for life and health insurers, along with the reinsurers that back them.

One of the main reasons is demographic change. From 2004 to 2024, the proportion of people age 65 and older in the European Union rose from 16.4% to 21.6%. The share of people 80 and older climbed from 3.8% to 6.1% over that same stretch.

S&P warned, "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 human toll is already severe. Roughly 9,000 of the 10,650 excess deaths during the June 22 to 28 heatwave were among people 65 and older. In the United Kingdom alone, 2,877 excess deaths were linked to a four-day heatwave in May and an eight-day heatwave in June.

S&P also emphasized that the financial strain is not limited to fatalities.

"Beyond heat-related deaths, it's also deteriorating health conditions and the resulting increase in treatment and hospitalisations that might weigh on re/insurers' financials and, subsequently, increase premiums," the report said.

More background

Older adults are especially vulnerable during high temperatures because their bodies are less able to cool themselves efficiently, and heat can worsen existing conditions such as heart disease and dehydration.

A study in The Lancet Planetary Health suggested that adults 60 and older may face serious danger from heat at lower temperatures than previously believed.

Parts of Europe have already seen temperatures above 104 degrees Fahrenheit (40 degrees Celsius), with record highs in Slovakia, Austria, and Hungary.

When extreme heat stretches across wide areas for days or weeks, insurers can face multiple waves of claims at the same time instead of a single contained event.

That dynamic could eventually mean higher insurance bills for households, particularly if insurers conclude their existing prices no longer match the risks posed by a warming climate.

What can be done?

On the industry side, insurers and reinsurers will likely need to adjust how they price risk as extreme heat becomes more common.

S&P said company ratings have not yet been affected, but it sees pressure potentially building over time.

Governments and health systems also have a major role to play by improving heat action plans, expanding access to cooling, and better protecting older residents during dangerous temperature spikes. Those steps can save lives while also reducing some of the financial fallout tied to preventable medical emergencies.

S&P added, "We will continue to monitor their impact on the performance of rated re/insurers."

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