80% of 600 Padua Hospitality Firms See 20% Sales Drop in Heatwave

For climate and energy professionals, Europe's fifth heatwave of 2026 shows that physical climate risk is no longer measured only in damaged infrastructure. It is now visible in empty terraces, lost SME revenue, and a business interruption insurance system that was not designed for non-damage heat disruption.

Europe's fifth major heatwave of the year has turned a century-old cultural ritual into a warning sign for the region's economy. In Padua, Italy, the traditional 6-7 p.m. aperitivo has largely disappeared as customers seek air-conditioned comfort indoors, leaving outdoor terraces empty and cutting sales for hospitality businesses. Federica Luni, president of hospitality association APPE Padova, said seating areas and outdoor spaces are \"left unused and empty.\" A survey of about 600 hospitality businesses in the city and province found that more than 80% reported turnover declines of around 20% during the recent heatwave. That single-city snapshot reflects a much broader economic problem: extreme heat is reducing productivity, curbing consumer spending, and raising operating costs across Europe.

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Moody's has estimated that last summer's European heatwaves cost €43 billion, or about $50 billion, in lost economic output while generating only about €500 million in insured payouts.

The macroeconomic damage is now measurable. Moody's has estimated that last summer's European heatwaves cost €43 billion, or about $50 billion, in lost economic output while generating only about €500 million in insured payouts. That is an 86-to-1 gap between economic loss and insured recovery, leaving an insured share of roughly 1.2%. For an economy the size of Europe, the figure suggests heatwaves are quietly becoming a major uninsured risk, particularly for small and medium-sized enterprises that dominate sectors such as hospitality, retail, and light services.

The structural problem is that heat itself is not a traditionally insured risk. Most property and business interruption policies are built around physical damage from named perils such as fire, flood, or storm. Extreme heat rarely causes the kind of catastrophic physical damage that triggers standard coverage, but the financial operational disruption it creates can be just as severe. Swenja Surminski, managing director for climate and sustainability at Marsh, explained that heat is not a traditionally insured risk because it rarely causes catastrophic physical damage the way a flood or storm does, even though the financial disruption can be comparable. This means many companies are exposed to a risk they may believe they have insured but in practice do not.

The coverage data support that concern. A 2023 survey of 9,000 small and medium-sized firms conducted for Europe's insurance regulator found that only 28% held business interruption cover as part of their property insurance. Even more striking, just 17% had non-damage business interruption protection covering events such as strike action. Non-damage business interruption is the category most likely to respond to extreme-heat disruption that does not involve physical property damage, yet it is the least common form of coverage among European SMEs. The result is that when a heatwave suppresses customer traffic, workers become less productive, or supply chains slow, the losses tend to sit directly on company balance sheets.

For insurers and reinsurers, this is both a vulnerability and an opportunity. The current gap means heat-related losses are not yet a major claims burden, but that also indicates there is no established market for heat risk. The industry has developed parametric products for other weather risks, such as rainfall or wind speed, and similar structures could be applied to temperature-linked revenue disruption. However, the low uptake of even non-damage business interruption cover among SMEs suggests that product availability alone will not solve the problem. Affordability, awareness, and the willingness of insurers to underwrite a risk that is becoming more frequent as the climate warms will all matter.