Insurance Europe's Thea Utoft Høj Jensen Talks Wildfire Risks

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Stephen Carroll** (0:07)
Now insurers are bracing for a new era of catastrophe risk in Europe as rising temperatures and other extreme weather increase the likelihood of fires, flooding and other disasters. The continent's big insurers have reported strong earnings this season, but warned of the bigger risks ahead. Let's take a listen to what executives at AXA, Swiss Re and Zurich Insurance have told Bloomberg in recent days.

**SPEAKER_3** (0:29)
We have to live with the fact that these fires are happening more and more. This is part of climate change.

**SPEAKER_4** (0:35)
This is part of our daily reality now.

**SPEAKER_3** (0:37)
We need to understand the risk. We need to say, okay, what's happening here? How can we mitigate the risk? And that's an area where we work a lot now with different parties, with municipalities, with utility companies.

**SPEAKER_4** (0:49)
I would not say that it's uninsurable. I would say that the cost of this insurance might be higher over time and could reach levels that might not be interesting convenience for the customers.

**Stephen Carroll** (1:06)
That was Tom O'Byrle of AXA, Anders Malmström of Swiss Re and Mario Greco of Zurich Insurance, all speaking to Bloomberg after their recent results. Let's discuss the picture now facing the industry though with Thea Utoft Høj Jensen, who is Director General of Insurance Europe, which represents the sector at an EU level. Good morning, welcome to our Brussels studio.
The picture going into this for insurers is complicated. I wonder how are the conversations happening within your organisation about the concern for these risks going forward? How worried are your members?

**Thea Utoft Høj Jensen** (1:38)
So I think fundamentally, I agree with a lot of the things that the CEOs already indicated here, that these risks are increasing. Climate change means that we have more severe, more frequent extreme weather events, especially wildfires as we're seeing them at the moment. So that means that we need to look at what are we doing about those situations. Ultimately, if you look across Europe where we are now, you have a record number of burnt areas across, which means that we are seeing that these are taking up a lot more attention.
We do also see that one of them touched on it about it being insurable or not. It's a matter of looking at this from a perspective of also what are we doing to prevent and make sure that we mitigate and adapt to address these things. Because climate change means that we will have to deal with this increasingly.
And that means that in order to maintain capacity for the insurance industry to address that, or to offer our insurances at a full level, which we are doing now, there are some initiatives that need to happen. It's a joint responsibility for municipalities, for governments, but also for insurers to guide our clients. But we see there's a lot of things that can be done on the preventive side. But I think it's very important for me to say that the current level of wildfires is manageable for the sector.
It is something that is... You have affordable insurance available across Europe for these things. They're usually integrated in standard insurance policies. And there is capacity to cover a lot of these things. I think an important thing is also... You need to look at two things. You need to look at the economic loss, which is going to be significant, the societal loss, which is going to be significant. But a lot of these losses, a lot of these areas that we're seeing attacked by wildfires are uninsured. So that means that if you look at the insured losses, you need to look at what and where is impacted by these wildfires. So that's where some of these numbers will not necessarily add up one one.

**Caroline Hepker** (4:00)
And so that then I come to the question around underinsurance. I mean, as the industry will kind of analyze this year of, you know, as you say, maybe manageable wildfires from some perspectives, but it's still historically very unusual. It's going to perhaps be a major year for wildfires. How much and how big is the problem of underinsurance?

**Thea Utoft Høj Jensen** (4:25)
That's difficult to tell because one, we don't have the numbers yet. We don't have the ability to assess what the losses are going to be and the insured losses in particular.
So that's going to be really difficult to assess. I think the important thing is to make sure that there's awareness around that insurance is available and that they can be covered, but we will have to see what that looks like as we get further down the line.