Max Cavallari / EPA
Homeowners and businesses in high-risk areas without insurance coverage will lose access to real estate loans and financing.
Natural disasters and climate, such as floods and heat waves, represent a risk for the financial resilience of the European Union (UE), with these phenomena having an increasing impact on access to housing, according to the environmental organization World Wide Fund for Nature (WWF).
“What is not insurable is not financeable. Homeowners and businesses in high-risk areas without insurance coverage will lose access to real estate loans and financing“, highlighted the WWF in its report on the topic.
The document – prepared with the consultancy of insurance companies such as Allianz and Generali, among others, and academic institutions such as UC Berkeley, the London School of Economics and the Vienna University of Economics and Business – warns that growing environmental risks are “pushing areas previously considered low risk into danger zones”.
“More and more regions of the EU are being affected by a growing insurance crisis, as extreme weather events become more frequent and severe,” said WWF.
The analysis corroborates a recent report from real estate services firm Jones Lang LaSalle, which reveals that approximately 580 billion dollars in European commercial real estate assets are concentrated in ten cities European countries most vulnerable to climate change.
“Of these, Rome, Istanbul, Barcelona and Athens face the greatest climate-related risks, while Paris has the highest overall exposure in terms of the value of buildings at risk”, highlighted WWF.
Rising insurance costs will lead to “increasingly high costs” for families, businesses and public budgets, said WWF financial expert Dominyka Nachajute, who called for “urgent measures to close the gap in insurance protection and safeguard Europe’s financial stability”.
Also one published in 2024 in Journal of Empirical Financereveals that the Loan approvals for real estate investments fall after periods of warmer than normal weather.
The main cause of this drop is the concern of credit agents with climate change and its potential impact on assets for which they are granting loans, in real time. From storms to health problems, climate change is causing .
O European continent is particularly vulnerable because it is warming twice as fast as the global average, which “exposes new regions to climate risks and brings some insurance markets to the brink of collapse”.
Between 1980 and 2023, only 5% to 20% of the economic losses resulting from these events were covered by insuranceaccording to data from the European Environment Agency.
“In the summer of 2025 alone, extreme events such as heat waves, floods and droughts caused losses estimated at 43 billion euros in the EU, according to official data, and ‘experts warn that accumulated losses could reach 126 billion euros by 2029 if no action is taken’”, noted WWF.
To correct the situation, the environmental NGO believes that governments and regulatory entities must “comprehensively assess climate risks and environmental issues and meet climate and biodiversity targets.”
They should also “prioritize nature-based solutions to adapt and strengthen regulatory and insurance frameworks to improve financial resilience”, to avoid the collapse of the insurance network, he added.
The environmental organization called on EU policymakers to “require companies to present credible transition plans and create risk-sharing mechanisms in which insurers and governments pool resources.”
“These mechanisms should not just compensate for lossesbut also guide insurers — as large investors — to move away from investments in fossil fuels and move towards decarbonization”, concluded WWF.
