The research division of Swiss Re AG has issued a stark warning about what it calls Europe's "chronic heat risk," as the continent confronts its fifth heat wave of the year and record-breaking temperatures that are straining infrastructure, agriculture, and energy systems.

"Record heat underscores Europe's chronic heat risk," the authors of the Swiss Re Institute report said on Tuesday.

Europe is less prepared for extreme heat than other regions, the report noted. Only about 20% of European households are equipped with air conditioning, compared with 76% in North America. The gap has wide-ranging implications for human health and economic productivity, Swiss Re Institute said.

The continent is experiencing temperatures that "reduce agricultural productivity, strain water and energy systems, damage infrastructure, and lower labor productivity," the report's authors said. Europe is warming at nearly twice the global average rate — a trend that Swiss Re Institute cautioned could carry "severe" consequences.

The assessment follows a separate report issued last month by Munich Re AG, which warned of the "dangerous mix" created by El Niño and global warming. Swiss Re and Munich Re are the world's two largest reinsurers, meaning their risk models underpin pricing decisions across the global insurance industry. Together, the two insurers' findings paint a picture of an industry bracing for a new era of climate-driven risk fueled by relentless temperature increases and disrupted weather patterns.

Extreme heat has pushed most of England into drought, threatening harvests. Across the continent, vital waterways used for commodity transport are running dry.

In a note published Tuesday, Oxford Economics warned that low water levels on Germany's Rhine River — a critical artery for shipping coal, chemicals, and grain across the continent — have left chemical, metal, and construction companies most exposed to supply disruptions. The situation also carries inflationary implications. Nuclear and hydroelectric power generation are being "adversely affected by hot rivers, leading natural gas to set electricity prices," said Oliver Rakau, chief Germany economist at Oxford Economics.

Swiss Re Institute said that while Europe's wildfire risk "is still considered moderate, the increase in fire activity warrants closer attention." It added: "As heat in Europe increases, wildfire-conducive conditions are likely to become more frequent."

Fires across France, Spain, and Greece have already caused as much as €19.1 billion ($22 billion) in total damage and economic loss this summer, according to a preliminary estimate by AccuWeather. The weather-tracking firm said heat and drought will keep Europe's wildfire risk elevated through the fall.

"Europe's recent wildfires highlight how hotter and drier conditions are making large wildfires more likely, and — with more homes, businesses and infrastructure built in risk-exposed areas — also more costly," said Balz Grollimund, head of catastrophe perils at Swiss Re, in a statement.

The warning comes even as global insured losses from natural catastrophes declined in the first half of 2026. Swiss Re Institute placed the total at $42 billion, which it described as "well below the long-term trend." The deadliest and most destructive event during the period was the Venezuela earthquakes, which claimed more than 5,000 lives.

Severe convective storms — including thunderstorms, hail, and tornadoes — produced smaller first-half losses than in previous years. However, Swiss Re Institute clarified that "the relatively low insured losses were not a result of subdued storm activity." The institute also cautioned that "a quiet first half is not necessarily indicative of below-average annual losses," noting that the long-term "upward trend in insured losses is intact."

A central concern for insurers going forward is how Europe adapts to rising temperatures, with wildfire exposure an area of particular focus. Europe's "extensive wildland–urban interface zones mean that a severe fire near densely populated areas could still generate substantial economic losses," Swiss Re Institute said.

This story was originally featured on Fortune.com.