Spain and Portugal are once again at the centre of Europe’s worsening wildfire emergency, with record temperatures, prolonged drought, and suspected arson combining to push fire losses to levels unseen in two decades.
The Spanish government confirmed yesterday that almost 1,900 soldiers are now engaged in firefighting operations, after an additional 500 troops were deployed to Galicia and Castilla y León. Those regions have endured some of the fiercest blazes, forcing evacuations, road closures, and even the suspension of part of the Camino de Santiago pilgrimage route.
So far in 2025, more than 158,000 hectares have been destroyed in Spain alone, an area equivalent to the size of metropolitan London. Portugal has suffered nearly as much, with over 155,000 hectares lost, half of it in a matter of days earlier this month.
Fatalities continue to rise. Four firefighters have been killed in Spain this summer, most recently when a vehicle overturned on a steep forest road in León. In Portugal, a firefighter died at the weekend and two colleagues remain seriously injured. Beyond the tragic loss of life, thousands have been displaced, and emergency services are stretched to breaking point.
For insurers, the consequences are profound. In Galicia, the regional government has already confirmed widespread residential and agricultural losses, while businesses ranging from vineyards to tourism operators are bracing for substantial interruption claims. European reinsurers, who have endured two consecutive summers of heightened catastrophe losses, face another season of elevated exposure.
A persistent challenge in Europe remains the brevity of insurance coverage for natural catastrophes. Only around 25% of losses caused by natural catastrophes (including wildfires) across Europe have historically been insured – and the situation may not be getting any better - the EU insurance watchdog, EIOPA, has stressed that as climate volatility increases, this protection gap is likely to broaden, threatening both financial resilience and insurance affordability.
“I think it is the biggest risk facing society, frankly,” Petra Hielkema, chair of the European Insurance and Occupational Pensions Authority, told the Financial Times earlier this year. “There are a lot of reasons why it could have a financial stability impact - first a lot of property losses need to be paid for and that becomes a problem - also it is a larger problem if people cannot get insurance for their houses and they can’t build.”
Spain has sought EU support, with water-bombing aircraft from France, Italy, and the Netherlands reinforcing domestic fleets. “This is a fire situation we haven't experienced in 20 years,” defence minister Margarita Robles told Cadena SER, noting that unusually high temperatures and tinder-dry conditions had created “special characteristics as a result of climate change and this huge heatwave.”
Portugal, where 2,000 firefighters remain mobilised across central and northern districts, is also awaiting additional aerial support. The cross-border cooperation reflects the scale of the crisis: the Iberian peninsula has emerged as Europe’s primary flashpoint, even as Greece, Bulgaria, and Albania have lodged their own urgent requests for EU firefighting resources.
Environment minister Sara Aagesen has been blunt in her assessment, calling the blazes a “clear warning” of Spain’s heightened vulnerability to global heating. She told Cadena SER that while some fires were started deliberately, “the fires are one of the parts of the impact of that climate change, which is why we have to do all we can when it comes to prevention.”
The meteorological service, Aemet, confirmed that Spain has registered unprecedented temperatures above 45C this month, with no historical parallel between August 1 and 20. The prolonged heatwave, coupled with years of drought, has created a near-permanent risk environment for wildfire outbreaks.
The crisis is not confined to Iberia. Greece has seen mass evacuations from the Peloponnese and its islands, while Turkey has reported fatalities among forestry workers. Smoke from Spain and Portugal has drifted as far as the United Kingdom, producing hazy skies and dramatic sunsets but also serving as a stark reminder that wildfire risk is increasingly continental in scope.
According to European Commission figures, over 439,500 hectares have burned across the EU so far in 2025, already surpassing full-year totals for most of the past decade. The Commission warns that Europe is warming at twice the global average, and the fire season is lengthening, with September now accounting for an increasing share of catastrophic blazes.
For the insurance sector, the events highlight several pressing issues:
Prime minister Pedro Sánchez has acknowledged that “some challenging days lie ahead and, unfortunately, the weather is not on our side.” With meteorologists forecasting continued high temperatures into late August, the pressure on emergency services - and on insurers - will only intensify.
For insurance professionals, the lesson is clear: wildfires are no longer seasonal anomalies but systemic climate-driven risks, demanding not only immediate claims response but also long-term adaptation in underwriting, capital allocation, and risk modelling.
