Wildfires continuing to burn across Spain and France have become one of Europe's most significant fire events in recent years.
As of July 27, 2026, the fires are prompting both a consumer-facing advisory from the Association of British Insurers (ABI) and a credit assessment from Morningstar DBRS, which warned that the ultimate insurance impact will hinge on whether the flames reach densely populated areas rather than on the total area burned.
As of July 26, more than 220,000 people had been evacuated in France, according to Morningstar DBRS, while more than 75,000 had been evacuated in Spain and around 30,000 more ordered to shelter in place. Fires in the Spanish provinces of Madrid, Avila and Toledo have burned more than 45,000 hectares, and the French fire front has advanced to within roughly 15km of Bordeaux. Meanwhile, France has recorded 98,000 hectares burned since the start of the year, while Spain's year-to-date total has passed 150,000 hectares.
The ABI is urging UK holidaymakers in the region, and those with trips planned, to follow FCDO advice and check their policy wording, noting that only around half of UK travel policies include catastrophe cover and that travelling against FCDO advice is likely to invalidate a claim.
Loss adjuster Crawford has said it is mobilising catastrophe-response capability in both countries to support insurers and policyholders through the recovery process. For UK-based reinsurers and the London market more broadly, the event also carries a second layer of exposure through European property catastrophe books, which Morningstar DBRS's assessment addresses directly.
DBRS said it expects the fires to have a negative but manageable effect on the credit profiles of large, diversified European insurers, noting that French non-life insurers reported a 95.3% combined ratio for 2025, alongside an aggregate Solvency II ratio of 299%, giving the sector a meaningful capital buffer.
The rating agency drew a constrast with last year's Los Angeles wildfires, which produced roughly $40 billion in insured losses due to a dense concentration of high-value property; Spain and France, by comparison, have less combustible housing stock, and much of the land burned so far is forest or rural terrain that is often uninsured or excluded from standard property cover.
That could change quickly if fire reaches the suburbs of Bordeaux or communities near Madrid, turning what is currently a largely rural event into an urban one. DBRS said smoke, ash, firefighting damage, additional living expenses and evacuation orders could extend claims well beyond buildings directly touched by flames, with business interruption losses potentially significant for tourism, wine and transport businesses during peak summer season. Smaller insurers with concentrated property portfolios and high net retentions were flagged as more exposed than diversified groups.
Unlike floods and other catastrophes, wildfire losses in both countries fall mainly on private insurers rather than state-backed schemes.
Spain's Consorcio de Compensación de Seguros covers personal accidents suffered by people involved in wildfire suppression, but not most property damage or other personal losses, while France treats wildfire as a standard insurable fire peril within multirisk home policies rather than through its public-private natural catastrophe regime.
Household property insurance take-up in Spain sits close to 80%, according to the OECD, but is generally lower in the rural areas most exposed to wildfire. DBRS also noted that Spain's 2025 fire season, the worst in three decades at almost 355,000 hectares burned, caused close to €5 billion in economic losses but well under €1 billion in insured payments, illustrating a substantial protection gap.
Global reinsurance capital reached a record $790 billion at the end of the first quarter of 2026, and property catastrophe buyers secured double-digit price reductions at the June and July renewals as capacity outstripped demand, a dynamic that should help insurers absorb moderate wildfire losses without material capital strain.
DBRS cautioned, however, that wildfire tends to be a frequency and aggregation problem rather than a single peak event, meaning multiple medium-sized fires can erode annual catastrophe budgets and trigger reinstatement premiums even without a loss reaching a high excess-of-loss layer.
The agency expects greater differentiation at the January 2027 renewals, with loss-affected programmes or those relying on weak location data facing higher retentions, while portfolios backed by granular geospatial data and credible mitigation should remain attractive to reinsurers. Separately, AXA Climate has estimated that high-risk wildfire days around selected French cities could rise by nearly 70% by 2050.
For UK insurers and reinsurers with European catastrophe exposure, this event is a live test of how quickly Europe's fire risk near cities can escalate, and a reminder that current price reductions in the reinsurance market may not hold if a fire reaches a major urban area.
