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Guy Carpenter warns southern Europe wildfires could drive bigger insured losses

The reinsurance broker says insured losses have been relatively contained so far, but the risk could jump if fires spread into more densely populated areas and disrupt businesses beyond property damage.

Reported · Written up by our desk · Reinsurance

Global reinsurance broker Guy Carpenter, a Marsh business, said the latest wave of wildfires across southern Europe is underscoring wildfire risk as an expanding resilience challenge, with impacts increasingly reaching beyond direct property damage.

Guy Carpenter said insured losses have so far remained relatively contained because many affected areas are rural and have lower property exposure. The firm warned the risk profile could change quickly if fires move into more densely populated regions, where higher concentrations of residential and commercial property could translate into significantly greater insured losses.

The broker added that the economic cost of major fires is shaped not only by physical damage but also by secondary disruption, including business interruption, smoke, evacuations, and supply chain impacts. It said these effects can hurt companies even when their buildings are not directly damaged, by reducing access to premises, interrupting operations, and adding costs related to business continuity.

For insurers and reinsurers, Guy Carpenter said this creates a more complex claims environment where losses are not limited to the immediate area affected by flames. The firm expected emerging loss drivers from the current fires to include agricultural damage affecting crops and vineyards, smoke related losses, evacuation costs, and business interruption.

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