Sunday, August 26, 2018

Report Outlines Climate Change Risks Faced by Insurance Sector

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A newly issued report that’s being touted as the “first important review of climate risk by an international financial standard setting body” may get the attention of the insurance community.

If it does, miss accomplished.  That’s what the report was designed to do, according to its authors.

The report is from the International Association of Insurance Supervisors and the Sustainable Insurance Forum.

The IAIS is an organization of insurance supervisors and regulators from more than 200 jurisdictions with a mission to promote effective and consistent supervision of the industry.  The SIF, which is convened by UN Environment, is a network of insurance supervisors and regulators working with the goal of strengthening responses to sustainability challenges.

The report outlines climate change risks faced by the insurance sector and it aims to raise awareness for insurers and regulators, or supervisors, of the challenges presented by climate change and how to respond.

The report asserts that physical, transition, and liability risks, as well as figures on extreme weather events, point to a “growing trend of damages, both for insured and uninsured goods.”

The report, which was developed over seven months beginning with IAIS committee meetings in Kuala Lumpur, where the group confirmed climate and sustainability issues as a strategic priority, sets out a framework of observed approaches to address climate change risks and outlines approaches undertaken by SIF members – Australia, Brazil, France, Italy, the Netherlands, Sweden, the United Kingdom, and the U.S. states of California and Washington.

“It is important to recognize that insurers may be well-versed in understanding the dynamics of such extreme events, and may able to adjust exposures through annual contract re-pricing,” the report states.  “However, the potential for physical climate risks may change in non-linear ways, such as a coincidence of previous un-correlated events, resulting in unexpectedly high claims burdens.”

Read more at Report Outlines Climate Change Risks Faced by Insurance Sector

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