Anchoring climate change risk assessment in core business decisions in insurance

This report elaborates on the need for re/insurers to implement more holistic climate change risk assessment in their core business decisions, taking into account physical, transition and litigation risks over different time horizons and their effect on both sides of the balance sheet. With three business use cases and exclusive insight from regulatory and standard-setting bodies, the report offers clear steps forward in a changing risk landscape.

Some of the key findings and recommendations for re/insurers, insurance associations and regulatory and supervisory bodies are as follows:

1. Re/insurers should expand their climate change risk assessment exercises through an exploratory, iterative and adaptive process, leveraging their experiences to date and aspiring to a holistic approach with a view to both sides of the balance sheet
2. Re/insurers should participate in industry-level collaboration to conduct an analysis of existing data and tools, challenges, gaps and needs to enable the insurance industry to build robust capabilities in forward-looking climate change risk assessment, and to identify priority areas and requirements for the development of future tools.
3. International, regional and national insurance associations should offer robust platforms for discussing and sharing experiences among members in their respective jurisdictions.
4. Regulatory and standard-setting bodies should continue to strengthen coordination and collaboration mechanisms with the insurance industry and among themselves, to expedite convergence on best practices and disclosure standards for each sector and jurisdiction.