Climate: S&P – surge in mortality due to heatwaves to weigh on insurance results

But for the time being, it will not affect the company’s credit rating

(Il Sole 24 Ore Radiocor) - Heatwaves are becoming one of the deadliest climate risks for Europe, a continent that is warming twice as fast as the global average. Suffice it to say that in the week between 22 and 28 June alone, there were 10,650 excess deaths – over 9,000 of whom were aged over 65 – due to temperatures, which this summer reached a perceived 48 degrees Celsius. This is according to the Insurance Brief by S&P Global Ratings, which highlights that excess mortality and the exacerbation of pre-existing conditions linked to heatwaves could impact the financial results of European insurers, but should not affect their ratings. Indeed, extreme heatwaves in Europe coincide with a rapidly ageing population. Between 2004 and 2024, the proportion of people aged 65 and over in the EU rose from 16.4 per cent to 21.6 per cent, whilst the proportion of those aged 80 and over rose from 3.8 per cent to 6.1 per cent. The rise in the proportion of older people – who are particularly vulnerable to heat stress – could lead to a further increase in deaths, as well as in the need for medical care and hospital admissions. Consequently, primary insurers and reinsurers in the life and health sector will have to manage a greater number of mortality claims and a growing demand for medical services. According to S&P, this could have an impact on their balance sheets, but not to the extent that it would affect their ratings. However, the picture could change in the long term with increasingly frequent extreme summer temperatures and a further ageing of the population. Nevertheless, experts believe that European insurers are well-positioned to assess and manage these risks, “by supporting claims prevention initiatives and raising policyholders’ awareness of heat-related health risks”.

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