The extent of these problems in the future will very much depend on future transport policies in affected areas. In northern Europe, the greatest negative impacts on construction are likely to arise from river floods. Unless adaptive measures are installed in time, flood damage also would increase dramatically. Increased summer drought also would heighten fire danger, especially in the Mediterranean area. Thus, possible increases in flood magnitudes and frequencies are unlikely to seriously affect the insurance sector.
Droughts affect insurance only through the impact of land subsidence on buildings.
Damage to buildings from windstorms is widely covered by insurance in Europe. Dorland et al. Europe is home to the largest reinsurance companies in the world. Reinsurers insure other insurance companies from all over the world for large losses for instance, losses resulting from natural disasters. Thus, increases in floods or tropical cyclones in highly developed areas may affect Europe s financial sector.