Objectives of the session
The insurance sector grapples with escalating climate and environmental risks. Quantifying these risks and lacking standardized measurement methodologies hinder risk assessment. Regulators emphasize data collection and stress testing to enhance accuracy. Striking a balance between sectoral and company-specific approaches for risk assessment is crucial. Transition planning’s role is under consideration.
Climate risks also affect consumer relationships, necessitating communication of risk management strategies and sustainability considerations.
Regulatory aspects of capital allocation on climate and environmental risks are pivotal for sustainability. Regulators worldwide are incorporating climate stress tests into frameworks, potentially leading to climate-specific capital buffers or adjustments to prudential measures.
Regulators are also working on disclosure and reporting requirements for climate and environmental risks, promoting transparency and mitigating greenwashing. This aligns with the push for climate-related financial disclosures and EU sustainability objectives.
The session will clarify whether the insurance sector faces complex challenges related to climate and environmental risks. The priorities for incorporating sustainability risk into regulatory frameworks will also be addressed.
Questions to be addressed.
- What is the current state of sustainability risk measurement and mitigation in the insurance sector globally, and what progress has been made regarding EIOPA/IAISB guidelines?
- What are the lessons learned and progress made on the former stress testings (EU, NGFS, …) and related feedbacks?
- What are the main challenges posed by the incorporation of sustainability risk in the insurance regulatory framework, as well as the EU insurance industry and supervisors, and the policy priorities in this respect?