The European Commission will launch a Climate Insurance Alliance to boost insurance coverage for losses from droughts, wildfires and heatwaves after a severe summer of extreme weather. Only about 25% of climate-related economic losses in the EU are currently insured, prompting a joint effort by insurers, investors, risk modellers and public authorities. Additional measures include an October climate resilience strategy for 100 vulnerable territories, a heatwave early-warning plan and an EU water plan to tackle drought risk.
EU Launches 'Climate Insurance Alliance' After Devastating Summer of Wildfires and Heatwaves
FILE PHOTO: The sun is partially obscured as smoke from wildfires affecting Zaragoza province linger on the horizon, in Farasdues, Spain, July 16, 2026. REUTERS/Violeta Santos Moura//File Photo
The European Union will establish a Climate Insurance Alliance to expand insurance coverage for losses caused by extreme weather, European Commission President Ursula von der Leyen announced on Wednesday as the bloc recovers from a summer marked by drought, widespread wildfires and repeated heatwaves.
Europe is warming about twice as fast as the global average, a trend that intensified this year's fires and heatwaves. According to EU figures, only around 25% of climate-related economic losses in the bloc are currently insured, leaving national budgets frequently acting as the insurer of last resort.
What the Alliance Will Do
The alliance will bring together insurers, investors, risk modellers, public authorities and policyholders to design solutions that increase insurance uptake and reduce exposure. It will identify and promote risk-reduction instruments such as group insurance and parametric insurance, where payouts are automatically triggered when predefined thresholds — for example, rainfall amounts or temperature levels — are breached.
European Commission President Ursula von der Leyen delivers the State of the European Union address (SOTEU) to the European Parliament, in Strasbourg, France, September 16, 2026. REUTERS/Yves Herman
"Far too often, national budgets become the insurer of last resort. We need to take action to close this gap," von der Leyen told the European Parliament.
Broader Preparedness and Resilience Plans
While the EU has ambitious targets to cut greenhouse gas emissions, officials and independent advisers say it has been slower to prepare for the direct impacts of warming. In February, EU climate advisers warned that Europe is underinvesting in adaptation and urged measures such as restricting construction in flood-prone areas and redesigning urban spaces to reduce heat exposure.
Von der Leyen outlined complementary steps to strengthen resilience: a climate resilience strategy due in October that will focus on managing climate risks in 100 particularly vulnerable territories; a heatwave plan to improve early-warning systems and protect public health; and an EU water plan aimed at better drought-risk management.
Brussels has also asked senior firefighting officials to propose ways to improve wildfire response, including consideration of an EU-level firefighting fleet and enhanced cross-border coordination.
Reporting: Kate Abnett. Editing: Louise Heavens, Barbara Lewis and Hugh Lawson.
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