As Europe experiences its fifth heatwave of the year, traditional businesses such as cafes in the Italian city of Padua are feeling the pressure. The usual 6-7 p.m. slot for an early evening drink, or aperitivo, has all but disappeared as people seek air-conditioning indoors, cutting sales for many hospitality businesses.

Insurance Gap

Adding to the pressure, extreme heat often falls outside traditional business interruption insurance, exposing a growing protection gap for companies across Europe. According to a survey of about 600 hospitality businesses in Padua and its province, more than 80% reported turnover declines of around 20% during the recent heatwave.

A 2023 survey of 9,000 small and medium-sized firms for Europe’s insurance regulator found 28% held business interruption cover as part of their property insurance, while 17% had non-damage business interruption protection covering events such as strike action.

Parametric Insurance

To bridge the gap, insurers are increasingly exploring parametric products that pay out automatically when temperatures exceed predefined thresholds. Unlike traditional indemnity-based insurance, such policies do not require a lengthy loss-adjustment process.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.