Insurance Europe has today published its response to a consultation conducted by the European Insurance and Occupational Pensions Authority (EIOPA) on its draft opinion on the use of climate change scenarios in an insurer’s own risk & solvency assessment (ORSA).
While insurers agree that it is important to foster a forward-looking
management of climate change risk, as well as other risks, climate
change scenario analysis should only be included in an insurer’s ORSA if
it actually faces material climate risks.
The decision to perform forward looking analyses on climate change
risks in the ORSA should remain at the discretion of the insurer. Among
other things, this will enable insurers to take into account their
individual risk situations and any geographical specificities related to
climate change risks.
Insurance Europe also warned against additional prescriptiveness in
ORSA processes because of uncertainties and limitations connected to
climate risk scenarios, as well as differences in the materiality of
climate risks across insurers and time horizons.
Furthermore, it noted that the ORSA is not necessarily the most
appropriate tool to achieve forward-looking management of climate change
risk via standardised scenarios, and that other tools may be more
appropriate for an insurer to manage its risks.
Response
Insurance Europe
© InsuranceEurope
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