The MAS intends to work with insurers to anchor sustainability specialist teams in Singapore to undertake sustainability strategy development, risk screenings, environmental underwriting and product development, Mr Daniel Wang, MAS Executive Director, has said.
In a speech titled "Resilience Amidst Change" delivered at the General Insurance Association of Singapore Annual General Meeting Luncheon on 16 March, he said that the MAS is also planning to assess the impact of climate change on significant insurers by including climate-related scenarios as part of this year’s industry wide stress testing exercise.
In outlining MAS's multi-pronged approach to encourage the development of sustainable insurance and ensure this area is adequately supervised, Mr Wang also said that the MAS encourages insurers to enhance climate-related risk disclosures by adopting the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.
The MAS is partnering too with research institutes too to factor in long-term climate and environmental risks into risk models.
Mr Wang said that the consequent risks to the insurance industry from climate and weather disasters are real. Globally, 2017 was the costliest year on record for weather disasters with total economic losses at US$344 billion, 93% above the 2000 to 2016 average, he noted.
He said that managing climate change and promoting sustainability requires collective action by all stakeholders across the eco-system—policymakers, regulators, corporates, investors and civic organisations. To this end, Singapore is committed to the Paris Agreement to reduce carbon emission intensity by 36% by 2030. The government is introducing a carbon tax on large direct emitters of greenhouse gases from 2019. In the insurance space, the General Insurance Association and Life Insurance Association have both pledged support for global standards such as the UN Principles for Sustainable Insurance; and have begun conducting masterclasses on sustainable
Mr Wang said: “General insurers are arguably at the forefront of environmental issues as you wear three hats – that of ‘environmental’ risk carrier, risk manager and investor. Given these roles, insurers should comprehensively consider environmental risks and the impact of climate change in your underwriting and investment decisions.”