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Spain and France wildfire losses seen as insurers' earnings event

Morningstar DBRS said European insurers began the 2026 wildfire season with strong capital and liquidity, helping cushion expected claims.

Reported · Written up by our desk · Reinsurance

Spain and France are dealing with widespread wildfires that a Morningstar DBRS credit assessment expects to show up primarily as an earnings event for insurers, rather than a material credit problem. The ratings agency said insurers entered the 2026 wildfire season with strong capital positions and liquidity, providing a buffer for potential claims.

Morningstar DBRS pointed to evacuation figures and the scale of burned area, noting that as of 26 July more than 220,000 people had been evacuated in France, while Spain had evacuated more than 75,000 people and ordered around 30,000 to shelter in place. It also said fires in Spanish provinces including Madrid, Ávila and Toledo have burned more than 45,000 hectares, while France has recorded 98,000 hectares burned since the start of the year, with Spain’s year-to-date burned area exceeding 150,000 hectares.

The agency said eventual insured losses would depend less on total area burned and more on whether fires reach densely populated areas and high-value commercial exposure. It flagged proximity of the fires to Bordeaux as a potential risk to residential property, tourism, wine-related businesses, transport networks, and business interruption claims, with similar concerns for communities west of Madrid.

Morningstar DBRS expects negative but manageable credit implications for large European insurers. It contrasted the current situation with the 2025 Los Angeles wildfires, where concentrated high-value property drove about $40 billion in insured losses, and noted that Spain and France generally have less combustible housing stock while affected areas have often been forested or rural, where trees, plantations, and undeveloped land are frequently uninsured or excluded from standard property policies.

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