australiaen
Managing climate change risk for insurers

Managing climate change risk for insurers

30-12-2021 | Insight

No sector is more exposed to the harsh reality of climate change than insurers. Rising claims need to be backed by a solid set of assets that can sustainably support liabilities in the years to come. Therefore, the need to make investments more sustainable and mitigate climate risk in insurer’s portfolios is growing, particularly as regulators around the world take a tougher stance.

  • Clara Yan
    Clara
    Yan
    Head of Insurance Analytics
  • Denis Resovac
    Denis
    Resovac
    Head Insurance Strategy

With these challenges, however, there are also great opportunities for the insurance industry to benefit from an inevitable and promising structural change in the investment and underwriting business. As the world sets goals for net zero emissions, huge opportunities are appearing in investment arenas such as renewable energy and decarbonization technology.

Meanwhile, regulation is increasing and society’s expectations for the financial industry to act on global warming are growing. So what are insurers to do?

In this first article in our ‘Climate change risk management for insurers’ series, we examine the role of insurance regulators in providing guidance on implementing climate-related risks. This is particularly relevant in the area of climate risk stress testing, where a range of potential scenarios are considered in order to assess possible financial impact on insurers.

A regional overview provides us with the latest developments in climate risk management across Europe and the Asia-Pacific. Finally, we share our thoughts on the impact of climate risk on insurance capital requirements, by showing how Robeco incorporates climate risk stress testing scenarios into its own solvency assessments.

Solutions for insurers

For insurers to make the most of a strategy, customization is essential.

Read more
Logo

Disclaimer

BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.

What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:

  • who holds an Australian Financial Services License
  • who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)
  • that is a body regulated by APRA other than a trustee of:
    (i) a superannuation fund;
    (ii) an approved deposit fund;
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme.
    within the meaning of the Superannuation Industry (Supervision) Act 1993
  • that is a body registered under the Financial Corporations Act 1974.
  • that is a trustee of:
    (i) a superannuation fund; or
    (ii) an approved deposit fund; or
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme
    within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.
  • that is a listed entity or a related body corporate of a listed entity
  • that is an exempt public authority
  • that is a body corporate, or an unincorporated body, that:
    (i) carries on a business of investment in financial products, interests in land or other investments; and
    (ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.
  • that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.
I Disagree