News eDaily28 Jul 2017

Global:Group of insurance regulators backs climate disclosure

28 Jul 2017

A network of insurance supervisors and regulators, including the Monetary Authority of Singapore, have voiced support for the adoption of a global standard for climate disclosure.

The group, the Sustainable Insurance Forum (SIF), welcomes the recommendations and guidance of the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD).

Other members of the group include the Australian Prudential Regulation Authority, California Department of Insurance and the Bank of England-Prudential Regulation Authority and UAE Insurance Authority.

The SIF says in a statement that climate disclosure within the insurance sector is important to accurately forecast and manage risks and suggests it will prove instrumental in ensuring the protection of policyholders, the resilience of insurance firms and the stability of the industry as a whole.

In its role as risk manager, risk carrier and investor, the insurance sector plays a cornerstone role in the management of climate-related risks and opportunities, the statement says.

Clear, comparable and consistent climate-related financial disclosure enable insurance firms to improve their management of physical and transition risks in their underwriting operations, as well as strengthen the consideration of climate-related factors in their investment decision-making. Effective disclosure is also important to enable investors, consumers and supervisors to have an informed view of an insurance firm’s performance and prospects.

The TCFD market-led process has delivered a set of voluntary recommendations that provide a comprehensive new framework for disclosing climate-related financial risks and opportunities. Most importantly, it provides a practical way for translating climate change factors into decision-useful information that identifies the material financial impacts for corporate and financial sectors.

The TCFD’s overarching framework focusing on governance, strategy, risk management and metrics builds on existing practice. The specific guidance for insurance firms as underwriters and asset owners will help drive convergence in reporting, enabling comparison across the sector.

Implementation of climate disclosure recommendations

Implementation of the recommendations is now key. This will require considerable capacity building in the insurance sector, particularly in developing countries. The SIF believes that insurance supervisors can play an important role in promoting widespread adoption of the recommendations, consistent with their individual mandates and policies.

While the Task Force’s expectation is that implementation is driven by the private sector, some SIF members have determined that market discipline and voluntary action alone are not likely to be sufficient to deliver satisfactory disclosure in a timeframe that is adequate to address rising climate-related risks. Supervisors from a number of jurisdictions have already introduced requirements for climate risk reporting from insurance companies. Certain jurisdictions may make aspects of the TCFD recommendations mandatory for insurance firms, depending on their mandates and strategic objectives.

 

| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.

 

Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.

Other News


Follow Asia Insurance Review