Extreme heat has been identified as the leading climate-related liability risk for the European occupational pensions market, in a new report by the European Insurance and Occupational Pensions Authority (EIOPA).

EIOPA's report examined the impact of climate change on life and health insurers and occupational pension providers, noting that heatwaves accounted for 97 per cent of deaths linked to extreme weather and climate events in Europe since 1980.

According to EIOPA, the risks associated with extreme heat are not yet having a significant financial impact, due to offsetting factors, widespread public-sector healthcare coverage, and portfolio diversification, but are expected to increase in the years ahead.

The report said climate change poses a financial risk to pension schemes through its impact on life expectancy, health and illness rates, rather than being solely an environmental, social and governance (ESG) consideration.

Rising temperatures, wildfires and the spread of disease could affect the assumptions used by insurers and pension providers to model mortality, illness and life expectancy.

To better understand these risks, EIOPA developed a risk-scoring framework to assess the impact of heatwaves on insurers and pension providers across countries and business lines.

The methodology is based on hazard, vulnerability and exposure metrics and closely follows EIOPA's methodology for measuring non-life insurers’ underwriting exposure to physical climate change risk.

The report noted that the heatwaves and wildfires seen across Europe during the summer of 2026 matched or exceeded conditions that were once considered exceptional.

"With the natural catastrophes of recent years, it has become apparent that our physical infrastructure is increasingly at risk from floods, storms and wildfires,” said EIOPA chair, Petra Hielkema.

“But climate change also has quieter, less visible consequences – ones that show up more forcefully in statistics than in photographs.

“The impact of heatwaves on human health is one of them, and our preliminary study shows that it could become a material risk factor for certain insurance lines and pension providers, despite offsetting factors and strong diversification across products and risks."

EIOPA said heatwaves could have the greatest impact on medical expense, income protection and workers' compensation insurance, although the effects will vary by product and portfolio.

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