News Summary

• Extreme heat often falls outside traditional business interruption insurance.
• Moody's estimates that last summer's European heatwaves cost €43 billion ($50 billion) in lost economic output while generating only €500 million of insured payouts.
• Heatwaves are increasingly taking a toll on Europe's economy, reducing productivity, curbing consumer spending and raising operating costs.
• For insurers, such losses can ‌be difficult to cover because they often stem from indirect ⁠operational disruption rather than property damage.
• To bridge the gap, insurers are increasingly exploring parametric products that pay out automatically when temperatures exceed predefined thresholds.