Since the Financial Services Agency (FSA) published the 'Supervisory Guidance on Climate-related Risk Management and Client Engagement' in 2022, it has maintained dialogues with financial institutions, including insurance companies.
In its latest report, the FSA looked at how financial institutions are addressing climate risk. For instance, the report noted that financial institutions have formulated policies excluding or taking a cautious approach to investments and insurance underwriting with severe negative impact on the environment.
Said the report, “Some have designed risk management policies, such as heat maps that identify sectors with higher risks.”
The report also pointed out that some insurers are also integrating overseas regulations and policies, such as considering local climate change policies of overseas subsidiaries when formulating investment and insurance underwriting policies.
Additionally, the report showed that some large non-life insurance companies have set targets for underwriting amounts and revenue growth rates for climate-related insurance products.
The full report can be read here.