Public Consultation: Draft Issues Paper on Climate Change Risks to the Insurance Sector

Comments due by 29 April 2018 midnight Basel time

Background:

The Sustainable Insurance Forum (SIF) and the IAIS have developed a draft Issues Paper on Climate Change Risks to the Insurance Sector. This draft paper has now been released for public consultation.

Climate change will have significant yet highly differentiated impacts on human and environmental systems around the world, including an increasing frequency and severity of natural catastrophes. Responses to climate change – such as new policies, market shifts, technological innovation, and social change – will also have major impacts, including on the structure and function of the global economy. These and other developments have prompted insurance supervisors to begin examining the relevance of climate change for insurance supervision, both individually, and collaboratively through the SIF. In July 2017, SIF members requested the SIF Secretariat to develop a guidance document on climate change and insurance supervision. In November 2017 the SIF and the IAIS agreed to advance this document jointly as an issues paper.

The objectives of this Issues Paper are to raise awareness for insurers and supervisors of the challenges presented by climate change, including current and contemplated supervisory approaches for addressing these risks. The paper provides an overview of how climate change is currently affecting and may affect the insurance sector now and in the future, provides examples of current material risks and impacts across underwriting and investment activities, and describes how these risks and impacts may be of relevance for the supervision and regulation of the sector.

The paper also explores potential and contemplated supervisory responses, and reviews observed practices in different jurisdictions. In doing so, it identifies gaps and emerging areas which need to be resolved to allow for effective supervision. Finally, the paper offers preliminary insights from practice, and initial conclusions relating to the supervision of climate change risks to the insurance sector.

It is worth noting that the paper is intended to be primarily descriptive and is not meant to create supervisory expectations. Nevertheless, the paper may shed light on the need for additional, more specific joint material from the IAIS and the SIF to support supervisors in their efforts to better understand and address climate change risks.

How to provide feedback

Feedback on this draft paper is invited by 29 April. Please use the Consultation Tool available at the consultation page of the public section (accessed below) to provide your comments. Instructions for use are available when you access the Tool. Please note that only comments submitted through the tool will be considered. All comments will be published on the IAIS website.

Please note that some formatting (e.g. bullet points) may not be preserved when copying and pasting your comments into the Consultation Tool from other software such as Microsoft Word.