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Sustainability risk in the insurance sector

Sustainability risk in the insurance sector

Day 1 Morning

Wednesday 26 April

Room :

ROOM 2

Speakers

Chair
Alberto Corinti
Member of the Board of Directors - Italian Insurance Supervisory Authority
Public Authorities
Åsa Larson
Executive Director Insurance - Swedish Financial Supervisory Authority (Finansinspektionen)
Fausto Parente
Executive Director - European Insurance and Occupational Pensions Authority
Romain Paserot
Deputy Secretary General - International Association of Insurance Supervisors
Industry Representatives
Mireille Aubry
Director of Prudential Regulation Standards & Foresight - Covéa
Hidehiko Sogano
Managing Executive Officer - Dai-ichi Life Holdings, Inc.

Objectives

It is mainstream that sustainability risk matters. Regulators and supervisors have been developing tools to enable insurers to develop related assessment and management tools.

In 2021 the EIOPA adopted guidelines on the assessment of the materiality of climate risks, and the integration of physical and transition risks in the ORSA.

EIOPA also analysed the influence and materiality of climate change on insurers’ existing exposures to physical risk, and non-life insurance business lines. Recently the EU Commission required the three ESAs to carry out a joint climate stress test exercise. The EIOPA has already stress tested EU IORPs.

A recalibration of the standard formula for the calculation of the capital requirement for natural catastrophe risks was also completed. Insurance regulators globally and in the EU are considering the form of the prudential treatment of environmental risks within the first pillar.

EIOPA surveyed EU insurance products addressing climate-related risks, regarding adaptation measures to reduce policyholders’ exposure and provide incentives to adopt preventive measures. An analysis of the risks of greenwashing on the insurance market has also been issued.

These regulatory and supervisory elements enable to take stock on the level of exposure of the insurance sector to sustainability risks, assess its level preparedness, and work out the next steps and priorities to appropriately address these risks.

Points of discussion

  1. What are the main lessons learned by the IORP sector stress test and the analysis completed by EIOPA? What is the level of exposure of the insurance sector to adverse sustainability-related events?
  2. What is the level of preparedness of the insurance sector in integrating sustainability risks? Which are undertakings’ challenges for adopting guidelines?
  3. What are the next steps and priorities regarding both climate-related regulation, guidelines, and supervision in the insurance area? What is the state of art globally and the contributions provided by the IAIS?