Europe's intense heatwaves could impact insurers' earnings as companies face an increase in claims related to heat-related deaths and deteriorating health conditions, according to rating agency S&P.
The agency noted that a prolonged summer of extreme heat has likely led to more drought and wildfire-related claims. Additionally, there will be consequences for life and health insurers, as well as reinsurers who provide financial protection to insurance companies.
This situation could result in higher premiums for customers as insurers seek to cover increased payouts to policyholders. Europe's heatwaves, combined with an ageing population, have led to health impacts disproportionately affecting older individuals.
This has contributed to a rise in life insurance claims for heat-related deaths and increased demand for private medical services. The S&P report indicates that the increasing proportion of elderly people, who are particularly vulnerable to heat stress, suggests that heat-related mortality in Europe is likely to rise.
In the UK, heatwaves in May and June together caused 2,877 excess deaths. S&P stated that while the heat has not yet affected company ratings, this could change in the medium to long term as extreme summer temperatures become more frequent and intense, and Europe's population continues to age.