In Europe, flooding was the most prevalent—and most expensive—climate peril last year, making 2024 the “Year of the Flood.” On this episode of Critical Point, five authors of Milliman’s annual Extreme Weather in Europe report assess the toll of flooding in their country and the response from insurers, governing bodies, and communities. They discuss what Italy is doing to protect the insurance industry, how construction in the UK and France may be contributing to flood risk, and why new regulations in Romania and the Benelux region may not do enough to keep pace with climate change.
Don’t miss the full Extreme Weather in Europe report, as well as the related paper, Flood risk modelling in Europe.
Transcript
Announcer: This podcast is intended solely for educational purposes and presents information of a general nature. It is not intended to guide or determine any specific individual situation, and persons should consult qualified professionals before taking specific action. The views expressed in this podcast are those of the speakers and not those of Milliman.
Anandi Shah: Hello and welcome to Critical Point, brought to you by Milliman. I’m Andi Shah, a consultant in our London office, and I’ll be your host today.
On this episode of Critical Point, we’re going to highlight some findings from Milliman’s annual Extreme Weather in Europe report, and I’m delighted to have four of my report co-authors with me today.
First, from Bucharest, we have Diana Dodu.
Diana Dodu: Thank you for having me.
Anandi Shah: Thanks, Diana, and then from Milan we have Francesco Pugassi.
Francesco Pugassi: Yes. Hi, everyone, and pleasure to be here.
Anandi Shah: From Paris we have Antoine Rainaud.
Antoine Rainaud: Hi! Thank you for having me.
Anandi Shah: And finally from Brussels we have Francesca Tiozzo.
Francesca Tiozzo: Hello! Thank you for having me.
Anandi Shah: Thank you all for joining me. I’m very excited to hear your local perspectives.
But first a little bit about this year’s report. Every year we look back on extreme weather events that struck across Europe and analyze their impact on insurers, regulators, and communities. We also look ahead to how the insurance industry and other stakeholders can take steps now to mitigate the financial effects of climate change.
Flooding: Europe’s most prevalent and expensive 2024 peril
Anandi Shah: For 2024 we delved into results in 10 countries, and overall one peril stood out as the most prevalent and expensive, and that was flooding.
In fact, the catastrophe data provider PERILS found that the two most expensive insured events in Europe last year were the Central European floods in September, which cost about 2.2 billion euros, and the Southern German floods in May, which caused about 1.6 billion euros in losses.
Today, we’re going to focus on the impacts of floods and other extreme weather events.
Diana, let’s start with you. In Romania there was a once-a-century flood in 2024, but also extreme heat. Can you recap these events and tell us what, if anything, insurers and regulators are doing in response?
A once-a-century flood in Romania
Diana Dodu: Thanks, Andi. So let’s start with heat. The summer of 2024 was the hottest on record globally and in Europe. Romania wasn’t spared either. Now the summer of 1946 was known for extreme heat in Romania, and, in fact, for certain parts of the Southeast, that year still holds the record. But across much of the country, 2024 became the hottest year on record.
And here’s the thing. Heat doesn’t just mean a number on the thermometer. The body can feel a lot more stress than the actual temperature suggests. This is where the universal thermal climate index, or UTCI, comes in. It considers not just heat, but also humidity, wind, radiation—basically everything that affects how hot it feels to a person. So you might be walking around on a sunny summer day in Europe with a thermometer reading 27°C, but because of factors like high humidity or direct sun exposure, your body could feel like it’s dealing with 35 degrees. This is something that the UTCI helps measure.
In Romania, especially in the South, including Bucharest, the UTCI hit over 32°C on 10 more days in 2024 compared to the average between 1991 and 2020. Now, the problem is that this type of extreme heat is not just uncomfortable. It can seriously affect someone’s health. We’re talking about increased risk of heat stroke, dehydration, and even heart problems.
Heat affects human health, agriculture, wildfires in Romania
Diana Dodu: But it’s not just people who are feeling the extreme heat. Our environment, especially agriculture, is taking a hit, too. Crops can suffer, livestock gets stressed, and forests become more vulnerable to fires. In fact, according to the National Forest Administration, the number of forest fires in the first half of 2024 was seven times higher compared to the same period in 2023. So that’s a big spike.
Now let us talk about insurance for a moment. All these extreme conditions—heat, drought, wildfires—they’re making it harder for insurance to assess risk and offer coverages at reasonable prices. Companies have to balance being prepared for these disasters while keeping insurance premiums affordable for everyone. So this is not a small task.
Floods, not earthquakes, cause most Romanian insurance claims
Diana Dodu: Now, shifting gears to another major natural risk in Romania: flooding. A lot of people immediately think of earthquakes when it comes to natural disasters in Romania, and for good reason: We are in an earthquake-prone zone. But when we look at the data from the insurance pool for natural disasters, PAID, it turns out that floods have led to more insurance claims than earthquakes. Just last September, for example, there was a major flood in eastern Romania, in the Prut River Basin. It was classified as a 1-in-100 to -120-year event. So something with very low probability, but a massive impact. In Vaslui County, it rained so much in one day that it equaled what you typically get in a whole year.
Now the mandatory catastrophe insurance in Romania—PAID—covers floods, earthquakes, and landslides. However, less than 25% of Romanians actually have this insurance. That’s a bit concerning given how common and damaging these events can be. Still, the very fact that we have a natural catastrophe pool through PAID shows that these risks are serious.
On the policy side, the government updated last year the National Strategy for Flood Risk Management, laying out a 10-year plan to tackle flooding more holistically. The idea is to look at the entire river basins, not just water levels, but also land use and infrastructure to better prevent and manage floods. With any luck, these kinds of long-term strategies will help reduce the impact of extreme weather events, not just on insurance companies, but also on communities across the country.
Anandi Shah: Thanks, Diana. Now, let’s move on to Italy. Francesco, what did you see there?
Modelling climate risks in Italy
Francesco Pugassi: So in Italy we can see some different changes starting from the Nat Cat decree coming in 2025 and parametric policies. So basically, you can see the Italian government is moving to protect insurance because climate change is affecting the risks, and the most important are precipitation and drought.
In fact, the two most important events in 2024 have been the Emilia-Romagna flood, and the drought, which affected Sardinia and Sicily and lasted for six months, while in Emilia we saw up to 360 millimeters in flood zone. And so we can clearly see that there is a need of being insured against such events.
And indeed, in Italy we are trying to develop internal models on all the risks which have to be insured, such as earthquake, flood, landslide, and windstorms. And then so we can map the risk and the predictors which influence them. For example, we can see that runoff and flooding have been influenced by precipitation and slope, and we are trying to put together this information to provide better insight and better insurance on Italy, starting from the position of the portfolio.
Anandi Shah: Thanks, Francesco. Moving on to France. Antoine, what did you see in terms of extreme weather and its impacts in 2024? We know drought and flooding can go hand in hand, and I know subsidence has been a concern in France in the past.
Construction in high-risk areas contributes to flood risk in France
Antoine Rainaud: Yes, effectively in 2024 France experienced many floods, as other countries in Europe, with heavy rainfalls impacting all of the territory, and in particular, north of France, that have been touched many times over the previous years, and in 2024, and in the beginning of 2025, marking that the flood era isn’t over yet.
This flood risk is becoming more and more severe, on the one hand, due to the development of new households and buildings, increasing the global exposure sometimes in at-risk areas. On the other hand, because of the climate change, increasing heavy precipitation. Indeed, IPCC experts tell us that for each degree of warming we have, there is about 7% more humidity in the air, and this excess humidity in the air is at some point converted into rainfall later.
Framework helps estimate flood risk across Europe
Antoine Rainaud: This flood risk can be divided into several subhazards, such as fluvial flood, when a river overflows, or pluvial flood, when there is an excess amount of rainfall runoff, or sea flooding, for instance, during storms. To tackle this issue, and in particular the fluvial flood, we developed a framework allowing European countries to better estimate the flood risk with current climate condition and with future climates according to IPCC scenarios. You can find out more information about this in our paper, Flood risk modelling in Europe, that is attached to this podcast.
And when it comes to subsidence, this particular risk affects a lot of French households because in our soil in France we have a lot of clay, and when it’s really hot the clay is reducing, and when you have a lot of precipitation the clay is expanding, and this movement can cause heavy damages to the structures of households, and in 2022 we have a lot of claims related to this subsidence. The previous years—2023, 2024—were quite wet years, and the clay expanded, and if in 2025, we have a hot and dry year we may experience a new record year for subsidence.
Anandi Shah: Thanks, Antoine. Let’s move on to Benelux. Francesca, can you tell us about the impact of extreme weather in the Benelux region last year?
Benelux government, regulator responses to climate risk
Francesca Tiozzo: Hi, Andi. Thank you. Yes, in the region where I am now—so the Belgium, Netherlands, and the Luxembourg region—we did have in 2024 extreme weather events that caused millions and millions of damages.
I would like to focus more on what are the next steps, and what the government and the regulators did to tackle such risks. In Belgium, the federal government increased intervention of insurances to up to 188% of received premiums. Such measure was implemented after the flood of 2021, and it started from the 1st of January 2024.
However, according to the framework that we developed at Milliman, we see that such ceiling may not be sufficient in case of other events, and it was actually not sufficient even to cover all the damages that were caused by the 2021 flood.
That is why Assuralia, which is the professional union of insurers in Belgium, stresses the importance of a synergy between the private and the public sector. In case the damages that exceed such ceiling will be covered by the private sector, then insurance companies will likely increase premiums, and this will happen especially for small insurance companies, which only have the option to use the reinsurance.
Disaster funds may not be sufficient
Francesca Tiozzo: On the other hand, in the Netherlands there has been a debate regarding the risk for flood damage due to failure of primary flood defense, which is currently not insured. In case of such failure, there is a governmental compensation that can be requested via the Disaster Compensation Act. However, according to the framework we developed, and under more severe CO2 emission scenarios, such fund may not be sufficient.
The insurance sector is developing some measures in order to tackle such risk—for example, increasing coverage of existing insurance contracts. However, the government opposed such propositions because it believes that the disadvantages of a public-private insurance pool outweigh the benefits. It considers that the probability of such event is very low, while cost would be very high, and this would lead the premiums of insurances to increase.
However, based on our study, we concluded that this very low probability that the government is considering might actually be quite higher, especially under pessimistic CO2 emission scenarios. We would also like to stress that in case a private insurance solution would become available, it is crucial that portfolios are diversified. This can be done internationally through the use of the reinsurance, or even within the country, given that the flood risk in the Netherlands is concentrated in specific regions.
U.K. flood risk from surface water flooding, building on floodplains
Anandi Shah: Thank you, Francesca. And finally, I’ll give the perspective from the U.K.
Warmer and wetter conditions are likely to continue, leading to an increase in frequency and severity of floods and heat waves. While the U.K. government has committed to investing 2.65 billion pounds over the next two years towards building and repairing over 1,000 flood defenses, there are concerns that this may not go far enough.
Flood risk isn’t just confined to areas near water bodies. In my opinion, the greater risk is from surface water flooding, which is harder to model. And, in fact, building new properties on existing floodplains should really not be allowed. Also, there is uncertainty about what will happen after the Flood Re scheme ends in 2039. How can we ensure that the most vulnerable properties are still protected and not deemed uninsurable?
The U.K. is better at implementing measures to deal with floods, although not to the extent that is needed to cope with the changing climate, because our measures are more reactive than proactive. When it comes to heat waves, however, we are very underprepared, and this will need addressing in the near future.
Looking at my co-authors now, does anyone have anything else to add about the impacts of extreme weather in Europe? Maybe anyone has any predictions for 2025?
New risk models, specialized tools help insurers address climate change
Diana Dodu: So based on past year events, we can only expect what the rest of 2025 can bring. These extreme events are not likely to disappear, so we need to tackle them properly. We’ve heard about how extreme weather can affect our bodies, our environment, our society, and the challenges they create when it comes to insurance, especially when it comes to offering the right coverage at affordable prices.
But here’s the good news. Insurers are finding ways to address these challenges through new advances in risk modeling and specialized tools, and some countries are already leading the way. So, for example, Austria has developed a system that helps visualize realistic flood scenarios. Italy is making great strides by using geographical information systems, and Milliman is working on natural catastrophe flood modeling, as we have heard.
These are just a few examples that show that this is a clear shift towards more advanced and sophisticated methods, first to understand these risks better, then price them more accurately, and ultimately help reduce the rising cost to society.
Anandi Shah: That was a great summary.
I want to thank everyone for joining me today. You can find the full Extreme Weather in Europe report on our website. Just go to milliman.com and type in “Extreme weather in Europe 2024” into the search bar. And don’t miss Antoine’s related paper, “Flood risk modelling in Europe.”