Portugal: Forest fires of 2017 caused €1bn in damage; €244m covered by insurance

Portugal: Forest fires of 2017 caused €1bn in damage; €244m covered by insurance

23 February 2018

Published by http://www.macaubusiness.com/

PORTUGAL – Last year’s big forest fires in Portugal, which killed more than 100, caused damage of more than €1 billion, of which just €244 million is covered by insurance, according to an international study by the insurer Aon.

The figures were confirmed to Lusa by the company’s technical in Portugal, Pedro Athouguia.

Aon’s annual report on climate and catastrophes cites five major natural disasters in Europe, the Middle East and Africa, including October’s fires in Portugal.

The country is “clearly” one of those that suffered the greatest financial losses as a result of forest fires, followed by the US, according to Athouguia.

The fires that swept central Portugal in mid-October caused damage of €875 million (€708 million), of which €270 million was covered by insurance.

“The local insurance sector declared that this was the most expensive natural disaster in the country’s history, with payouts of more than 295 million dollars,” the study finds.

Along with fires in central Portugal in mid-June, October’s fires are described as representing “the most destructive and deadly forest fires ever recorded” in Portugal.

The country also showed a particularly large gap between insurance protection and damages, in contrast to the rest of Europe and the US, the study found.

“We [in Portugal] tend to insure less,” said Athouguia. “There are still many entrepreneurs, many industries, many businesses that prefer to bear the risk himself” instead of opting for a financial instrument such as an insurance policy.

In terms of the industry, the report found that the insurance and reinsurance markets have the capacity to absorb the losses recorded last year.

The report notes the impact of a lengthy drought last year across southern Europe, with total damage of $6.6 billion in Spain, Italy and Portugal.

Satellite data cited by the report show that Europe had the “largest area of land burned since 1980”, at more than 1 million hectares.

In contrast to other southern European countries, the report notes, “Portugal was not capable of minimising the impact of forest fires in the long term.”

The percentages of areas burned in Portugal has been increasing since 1980 and since 2010 the country has averaged 35%, according to Aon, based on figures from the European Forest Fire Information System (EFFIS).

The report suggests that this could have to do with various factors, such as Portugal’s location – influenced by strong Atlantic winds – as well as increasing temperatures and lengthy droughts. It also cites forestry policies, above all the widespread planting of eucalyptus, which although very important for the country’s pulp and paper industry are seen as highly inflammable.

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