As wildfires become an increasingly familiar feature of European summers, attention is shifting from recovery towards prevention. Spain's 2026 fire season highlights both the challenges posed by a changing climate and the opportunities for insurers to play a greater role in building resilience.
This summer, Spain witnessed significant wildfire activity across both the north and the south of the country. By mid-August, over 250,000 hectares of forest had been affected.
The season was fuelled by an intense heatwave in late June 2026, which left vast areas of vegetation dry and susceptible to ignition. By early July, major fires were burning across several regions, and by the end of the month Spain had recorded a record number of wildfire incidents for that stage of the year.
While most of the fires had been brought under control by the end of summer, the full insurance impact has yet to emerge. Even so, rating agencies and market observers expect losses for European insurers to remain manageable.
One reason for this is the wildfire protection gap across much of Europe. Unlike the United States, where wildfires frequently threaten densely populated communities with high concentrations of insured residential and commercial assets, many wildfire-prone areas in Europe remain either underinsured or uninsured altogether. Wildfire coverage is generally less developed, limiting the insurance industry's exposure despite substantial economic losses.
Source: Navigator
Recent experience illustrates this imbalance. In 2025, wildfires in Spain caused EUR 5 billion in economic losses, of which only about 15% was insured.
As wildfire conditions intensify across Spain and other parts of Europe, addressing this protection gap is becoming more urgent. However, increasing insurance penetration alone will not be enough. Greater emphasis is also needed on measures that reduce the likelihood and severity of losses before they occur.
Spotting the spark
Among the most effective ways to reduce wildfire loss is early detection, an area that has benefited significantly from recent technological advancements.
The combination of remote sensing capabilities and artificial intelligence can help identify hotspots in near real time, while also supporting forecasts of how a fire may develop and spread.
Insurers are increasingly recognising the value of these capabilities. Allianz, for example, has been developing a wildfire detection and alert initiative across Spain during the 2026 fire season. Through the programme, the insurer can proactively inform its policyholders when insured assets are located near fire sources with potential for spread.
Early warnings can support faster decision-making, improve preparedness and ultimately help reduce the severity of losses.
The initiative reflects a broader shift within the insurance sector. Carriers are increasingly positioning themselves not only as providers of financial protection after disasters occur, but also as active partners in risk management and resilience.
Building back better
Early detection and rapid response can significantly reduce wildfire losses, but improving the resilience of the built environment is also needed.
The concept of 'build back better' focuses on rebuilding homes, businesses and infrastructure in ways that improve resilience following a disaster. In several countries, government-backed programmes provide financial incentives to support these upgrades.
In the United States, for example, FEMA's ‘Hazard Mitigation Grant Program Post Fire’ initiative helps fund projects designed to reduce future wildfire risks. To qualify, projects must demonstrate that their anticipated long-term benefits are expected to meet or exceed implementation costs.
The UK also has a similar scheme, but for property flood risk. Through the ‘Build Back Better’ programme, participating home insurers can provide policyholders with up to £10,000 to invest in flood resilience measures following a claim. These improvements can reduce future damage while enabling households to recover more quickly from subsequent events.
Elsewhere in Europe, countries including Portugal and Greece have strengthened post-fire recovery frameworks and introduced more stringent fire-resilient building requirements. But no European country currently offers a comparable property-level funding scheme dedicated to wildfire resilience upgrades.
As climate-related hazards become more frequent and severe, initiatives that strengthen resilience at the property level will become increasingly important. In the long-term, programmes that encourage adaptation and risk reduction may prove just as valuable as traditional insurance coverage itself.
Looking ahead
Although the 2026 wildfires are not expected to represent a market-changing loss event, they may still contribute to elevated claims activity for insurers operating in the region. Spain's fire insurance loss ratio reached 57.63% in 2025, marking the highest level recorded over the previous five years.
Source: Navigator
Whilst more hectares burned in 2025 than in 2026 so far, the fires this year still provide a clear indication of how the risk landscape is changing. Rising temperatures, prolonged drought and increasingly volatile weather conditions are creating a more challenging risk landscape.
For insurers, governments and property owners alike, the message is becoming clearer: as wildfire exposure grows, investment in prevention and resilience will become just as important as the financial protection provided when disaster strikes.