The insurance sector’s exposure to climate risks had already risen by almost 12% in 2025, even before the devastating storms that have been ravaging the country since January. And it is expected to worsen this year and in the coming years, in a context of an increase in extreme weather phenomena. This is exactly what the Insurance and Pension Funds Supervisory Authority (ASF) Annual Climate Risk Exposure Report indicates for 2025, released this Monday, February 2nd.
According to that balance, the sector’s aggregate exposure, associated with the portfolio of fire and multi-risk insurance policies, increased by 11.7% to around 1,010 billion euros. This is predominantly the non-life sector, in the housing and building coverage segment.
But the ASF recalls that there is a notable deficit in the coverage of these risks by individuals and companies, which promises to leave a large part of the affected populations without compensation. In effect “A substantial part of economic agents do not have insurance protection against physical climate risks”.
And that is one of the reasons why the ASF defends “shared resilience mechanisms” to “reduce coverage gaps and increase collective robustness in the face of climate challenges that are becoming increasingly demanding”. At issue is the creation of a catastrophic risk fund, which would also need approval from the Ministry of Finance, as it would be financed by insurance companies and the State. The objective is to ensure that there is a financial cushion to deal with unexpected situations, without leaving populations unresponsive, on the one hand, and without the financial sustainability of insurers being compromised.
The most recent aggregate data from the sector allows us to conclude that this is necessary.
For flood risk, the majority of the insured capital, that is to say, of the policies made for this risk, is located in areas with scores lower than 0.5 (on a scale of 0 to 1, where 1 corresponds to the highest risk), indicating overall moderate risk levels in terms of financial impact for insurers. In other words, higher risk areas do not necessarily correspond to a higher level of specific risk coverage, quite the opposite.
As for the risk of rural fire, the sector’s exposure is higher. “The analysis of rural fire risks confirms that the majority of insured capital is found in areas of zero or very low danger, especially in urban areas. However, relevant concentrations of medium, high and very high risk persist in the interior and central territories of the country, where structural danger is higher”, reveals the third ASF report on the insurance sector’s exposure to climate change.
Regarding the global and European context, the ASF states that “the current moment is marked by the review of several pieces of legislation in this area, with a view to reconfiguring the flow of sustainability information and also with effects on corporate sustainability responsibility”.
Leave a Reply