View the Standard

The Paper provides insurance supervisors with concrete tools to further strengthen their efforts in assessing and addressing risks to the insurance sector from climate change. It also sets out recommendations and examples of good practice, consistent with the Insurance Core Principles (ICPs). With this publication, the IAIS and SIF aim to promote a globally consistent approach to the supervision of climate-related risks.

The Paper provides recommendations on the following topics:

  • Role of the supervisor: Supervisors should assess the relevance of climate-related risks to their supervisory objectives. They should collect quantitative and qualitative information on the insurance sector’s exposure to, and management of, physical, transition and liability risks of climate change.

  • Corporate governance: When addressing climate-related risks, it is expected that insurers integrate these risks into their overall corporate governance framework. For instance, the control functions (including the risk management and actuarial functions) should properly consider climate-related risks and have appropriate resources and expertise to manage them.

  • Risk management: Climate-related risks have the potential to impact all insurers; therefore, these risks should be considered for inclusion in the Own Risk and Solvency Assessment (ORSA). Likewise, it is expected that insurers adopt the appropriate risk management actions to mitigate any identified risks

  • Investment policy: Insurers should assess the impact from physical and transition risks on their investment portfolio, as well as on their asset-liability management. A forward-looking view, including the use of scenarios, may help insurers gain a better understanding of the risks.

  • Disclosures: Material risks associated with climate change should be disclosed by insurers, in line with ICP 20 (Public Disclosure).