Extreme weather in Europe

What extreme weather means for Europe

By Anandi Shah, FIA; Mohamed Benkhalfa, FIA; Ian Penfold, FIA; Francesco Pugassi; Menno van Wijk, AAG; Niccolò Basetti Sani Vettori, ISOA; Antoine Rainaud; Jose Silveiro, IA; Diana Dodu, Full Member ARA; Valerie Lampert, IA; Laura Witting, AVÖ; Monika Lis, CRSA; and Arije Amara

Extreme weather events used to be rare—they are severe natural catastrophes at the extreme ends of historical patterns. But the climate crisis is making the extreme the norm. In 2023, severe weather struck across Europe. Heatwaves baked France, Romania, and Belgium. Northern, Central, and Southern Europe endured lengthy droughts that devastated crops. Violent storms battered the west, while widespread flooding caused billions of euros in damages. Italy alone recorded more than 350 severe weather events.

As the insurance industry grapples with the risks posed by climate change, Milliman’s annual research looks at the short- and long-term impacts of the 2023 extreme weather events in Europe. We also track how policymakers and insurers are responding, and offer actionable steps to help stakeholders develop a climate risk management framework.

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Where were the 2023 European extreme weather events?

Across Europe, 2023’s most pervasive extreme weather perils were flooding and drought. Hover below to see some of the impacts.

Extreme flood events

Austria

August rainfall causes 400+ landslides and damage exceeding €110 million

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France

Heavy November storms and rain cause estimated €550 million in damage

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Germany

Summer rains cause €140 million in damage; October storm surge hurts property, infrastructure, tourism

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Italy

May floods cause about €9 billion in damages, with only 6% of losses insured

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Romania

February flood damage to a recently rebuilt road prompts concerns about drainage systems

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Spain

September downpours cause collapsed bridges; home insurance claims up 232% from September 2022

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UK

Most of October storm Babet’s estimated €509 million in losses across Europe due to UK flood damage

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Extreme drought events

Austria

Drought causes €170 M in agricultural losses

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Luxembourg

100% of country affected by drought as of early July

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Netherlands

De Bilt station registers longest-recorded drought of 34 straight days

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Poland

Crop yields 20% below average due to drought

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Portugal

Groundwater levels below 60% after dry conditions start in February

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Romania

Drought combines with heatwaves to reduce crop yields, raise wildfire risk

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Spain

Drought harms sunflower crops; insured losses exceed €30 million

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Floods in Europe

Because a warmer atmosphere can hold more moisture, climate change is making extreme rain and flood events more common. This was glaringly evident in 2023, as flooding struck across Europe.

For European insurers and communities, the financial toll of floods is rising.

Across Europe, flood risk is only increasing. In the U.K., for instance, 2023 rainfall levels were 11% higher than average. In Italy, the precipitation ratio was nearly 8X the historical average during May flooding and 7X the historical average during the November flood.

This trend underscores the danger of persistent underinsurance against flood risk across Europe. For example, in Lower Saxony, the German state most affected by flooding, only 32% of homes are insured against natural hazards. In the Netherlands, flood risk associated with large rivers and the sea is not currently insured.

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Heatwaves and drought in Europe

Earth’s average temperature is now 1.48°C higher than during the pre-Industrial era, and 2023 was the hottest year ever recorded.

In Portugal, hot and dry weather began in February. In Spain, heat records began to fall in spring. But even Northern Europe, typically cooler, endured record heat in 2023: Germany, for example, had its warmest year since record keeping began in 1881. Belgium exceeded its historical temperature average for most months.

The 2023 heatwaves also led to drought across Europe and significant agricultural losses. Again, while Southern Europe experienced the most extreme drought conditions, Northern Europe was not immune. Impacts included:

Luxembourg

15%

smaller harvest than in 2022; losses on insured yields reached €150 million

Poland

20%

smaller harvest than average; drought frequency has doubled over the past decade

Spain

200%

increase in farm area affected by drought from 2021; €455 million estimated indemnities from lost crops

Although less destructive than in recent years, the 2023 wildfires, sparked by drought, burned a combined 120,000 hectares in Spain and Portugal.

Dry land also weakens building foundations, and the Association of British Insurers noted a surge in subsidence claims.

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How can insurers manage the risks posed by climate change?

Europe’s extreme weather events of 2023 underscore the need for the insurance industry to develop comprehensive strategies to mitigate the financial risks of a changing climate. Key risk-management tactics include:

Enhanced risk modelling: Developing more sophisticated risk models that factor in the increasing unpredictability of weather events

Product innovation: Creating products such as index-linked and parametric insurance that aligns with emerging risks, such as the growing vulnerability of crops

Sustainable investments: Contributing to a greener economy by shifting holdings from polluting projects toward environmentally sustainable organizations

Policy advocacy: Engaging with policymakers to shape regulatory frameworks that support adaptation and climate resilience

Education and awareness: Raising public understanding of weather-related risks and the role of insurance in climate adaptation

See more analysis and actionable steps for insurers

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