CP151 - Guidance for (Re)insurance Undertakings on Climate Change Risk


Overview

Description

The increased frequency and severity of weather related events linked to climate change is already having an impact on the insurance sector globally. The increase in insured claims arising from physical events alongside the impact of the necessary actions to transition away from greenhouse gas intensive activities, mean that (re)insurers need to take action now to assess and appropriately manage climate change risk.

In discussions with stakeholders on climate change risk it was noted that, while there is consensus that action is required, there is uncertainty on what to do and where to begin. A survey published by the Central Bank in May 2021 found that only 20% of (re)insurers fully integrate climate-change risk in their risk management framework, with less than half conducting some form of scenario analysis of stress testing.

The Central Bank is publishing this Consultation Paper to seek stakeholders’ views on proposed Guidance for (re)insurance undertakings on Climate Change Risk. The proposed Guidance aims to clarify the Central Bank’s expectations on how (re)insurers address climate change risks in their business and to assist them in developing their governance and risk management frameworks to do this.

Recognising that individual (re)insurers may be at different stages of maturity in their approach to managing climate change risk; the proposed guidance is based on a set of overarching principles and sets proportionate expectations dependent on the nature, scale and complexity of the (re)insurer.

Interested stakeholders are invited to provide feedback on or before 26 October 2022.

The Central Bank has also created an infographic to provide a visual overview of the approach to the assessment and ongoing management of a (re)insurer’s exposure to climate change risk set out in the Guidance.

CP Number : CP151
Date : 03 August 2022
Closing Date : 26 October 2022

Consultation Paper Document

CP151 Climate Change Guidance for (Re)insurers | pdf 432 KB