Extreme heat in Western and Southern Europe: A real and increasingly regular peril of climate change

Swiss Reinsurance Company

By Nikhil da Victoria Lobo 

Looking back at summer months, Europe is reeling from a punishing few months of surging temperatures. And not for the first time: The summers of 2018 and 2019 were also notable for their multiple heatwaves and extended dry spells.

The recent run of sweltering summers is a grim reminder of 2003, when much of Europe withered under a record-breaking heatwave that sent temperatures soaring to levels unseen since 1500. The unrelenting heat resulted in significant loss of life among vulnerable populations, particularly in Paris, and dealt a massive blow to agriculture across the region. 

At the time, deadly heat waves were nothing new: Just eight years earlier, more than 700 people died of hyperthermia Chicago over the space of five days. But the 2003 episode, which claimed a staggering 30,000-40,000 lives in France and Italy—was a global wakeup call, shifting public perception of heat waves from underperceived risk to a real and increasingly regular peril of climate change.

The "Mediterranean amplification" – well documented, if not entirely understood

Twenty years later, with countries struggling to confront climate change in a unified way, the cycles of high temperatures, erratic rainfall and drought have intensified. 2018 was the fourth-warmest year on record. And “medicanes,” spinning storm systems fed by warm Mediterranean waters, have become a regular event in the fall and winter, causing flash floods and mudslides around the region. Western and Southern Europe remains particularly vulnerable, because of “Mediterranean amplification,” a north–south warming gradient that is well documented by climatologists, if not entirely understood.

Over the last few years, drought-related catastrophes have been responsible for some of the biggest uninsured losses around the world. In Europe, the period from July to September of 2018 was one of the warmest and driest of the past 70 years, causing a dramatic decline in the quantity and quality of crops in France, Benelux, Germany and Poland. Total agricultural losses are estimated to be USD 6.9 billion. That same year, wildfires resulted in insured losses of USD 17 billion globally—another record. (For now, anyway, as continuing development of “wildlife–urban interface” areas puts more people and property at risk every year.)

Recently, insurers have seen increased losses stemming from drought-related soil subsidence—a phenomenon in which heavy rains, followed by a prolonged dry spell, cause soil to expand, then contract and sink. The result is cracked foundations and, in some cases, building collapses. Research by Swiss Re and the Swiss Federal Institute of Technology (ETH Zurich) found that in France alone, losses from soil subsidence have risen by over 50% since 1990, and today are comparable to those resulting from floods.

Not just increased losses, but also consequences for health and social stability

Also consider the less-well-known, “long-tail” impacts of heat and drought, including increased atmospheric pollution; reduced effectiveness of public transport systems; low river levels that impede inland shipping, disrupting supply chains; and sky-high energy prices and blackouts that result when nuclear power plants lack fresh water to cool their reactor cores (this happens simultaneously as demand for electricity spikes, as best evidenced by the 2003 blackout in the US).

The cumulative effect of all of the above has serious consequences for global health and social stability. Forest fires cause respiratory issues. Failed crops can lead to poverty and mass migration/displacement. Governments trying to secure water for their people—often to the detriment of neighbors—is ratcheting up regional tensions, giving rise to predictions of future “water wars”. And major soil subsidence can unearth long-buried pathogens, potentially sparking epidemics. In 2018, a Harvard University study found American high school students scored lower on standardized tests after experiencing a hot school year. The following year, separate studies published by the (US) National Bureau of Economics and the journal Studies in Conflict & Terrorism found a strong correlation between high temperatures and the incidence of violent crime and acts of terrorism.

Technology as the answer

Needless to say, an increasingly volatile climate makes it hard to offer cover for drought-related calamities at affordable premiums. At Swiss Re, we believe technology is the answer, and we’re leading the way with a number of tools:

  • Swiss Re’s Agro Analytics Platform allows underwriters to upload their portfolios and get a risk score for drought (and other extreme weather events) based on historical and near-real time weather data.
  • Our Drought Index Solution, developed in partnership with VanderSat, uses satellites to measure and analyze soil moisture in real time. It’s currently in use in several countries in the EMEA region.
  • The Weather Index Pricer, developed with our insurance partners, collects real-time data from thousands of hyperlocal weather stations improving the accuracy of risk monitoring and loss adjustment, and even reducing incidents of fraud.

Integration of these and future technologies opens the door to new parametric products that create transparency and automate claims based on pre-set thresholds (e.g., a farmer receives a payout after a certain number of days without rain), helping insurers keep up with a deluge of claims during periods of extreme drought.

Partnerships are also key. Swiss Re seeks to work with regional governments to create programs that protect people and property and limit financial losses (e.g., a building authority could incentivize homeowners to build or purchase structures designed to withstand soil movements). Swiss Re also collaborates with philanthropic organizations, most recently supporting its initiatives to categorize heat waves like hurricanes, to encourage better planning and management.

It’s this combination of historical data, cutting-edge tech and smart community planning that will help insurers avoid over-exposure to certain climatic hazards and set appropriate rates in both high- and low-risk zones, allowing people in Europe and elsewhere to weather many a scorching summer to come.

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