06 February 2020

Insurance Europe supports IAIS work on FSB TCFD recommendations on climate-change related disclosures

Insurance Europe has published its response to a consultation by the International Association of Insurance Supervisors (IAIS) on its draft issues paper on the implementation of recommendations by the FSB’s Task Force on Climate-related Financial Disclosures (TCFD).

Insurance Europe welcomes the IAIS work on climate change and its endorsement of the FSB’s Task Force on Climate-related Financial Disclosures (TCFD) initiative.

The European insurance industry is fully aware of, and well-positioned to address, the financial risks posed by climate change and extreme weather, since the measurement of climate-related physical risks lies at the heart of insurers’ business models. At the same time, insurers are continuously scrutinising their investment portfolios to incorporate long-term sustainability aspects and are increasingly considering the impact of transitioning to a low-carbon economy. Given the industry’s concentration of expertise in managing, modelling and pricing climate risk, it is well placed to provide expert input where possible and so appreciates any opportunity to provide evidence and feedback.

In addition, European insurers support increased transparency around sustainable investments and sustainability risks, provided the provision of information is balanced and efficient. Therefore, insurers support disclosures that help consumers and investors to make informed financial decisions aligned with their objectives.

In particular, European insurers support the fact that:

• The IAIS is considering the implementation of TCFD recommendations in various Insurance Core Principles (ICPs). Explicit references to sustainability in the ICPs will help strengthen the integration of material sustainability risks in insurers’ operations in a consistent and efficient manner. In addition, this could be an effective way of ensuring minimum standards globally.
• The IAIS is taking a coordinated approach between jurisdictions, reflective of the cross-border nature of climate-related risks. Coherent policymaking between jurisdictions will avoid duplicative or contradictory standards.
• Supervisors encourage insurers to produce robust climate-related disclosures and consider financially material climate-related risksthoroughly, provided feasibility and proportionality considerations are taken into account. In this respect, the use of qualitative scenario analysis can be a useful way to measure climate risks.

Full press release on Insurance Europe

Full response on Insurance Europe

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