Insurance companies and associations are mostly opposed to climate mandates proposed by the International Association of Insurance Supervisors (IAIS), despite increasing evidence that climate change is a significant risk to the insurance sector.
The recent findings from Influence Map show that several major insurance companies and lobby groups, including Insurance Europe, Liberty Mutual, the American Council of Life Insurers and US Chamber of Commerce, are either opposed to some or all of IAIS’s climate risk policy.
The IAIS is working on promoting a supervisory response to climate change. It released a public consultation on proposed changes to its core principles, including explicitly naming climate risk within its global framework for insurance supervision. The organisation is voluntary, but often informs the policies of national and local regulators.
While IAIS has not made public comments on its recent work, insurance organisations have spoken openly against the measures, Influence Map found. The Institute of International Finance said it does “not believe that the evidence and data demonstrate a near-term material threat to the financial stability of the global insurance industry,” while the US Chamber of Commerce questioned “the implication that climate change is currently a financial stability risk to the insurance sector”.
In the US, many insurance companies have either increased premiums or stopped offering new insurance applications in states like California and Florida due to increased wildfires and flooding.
In an open letter to the IAIS, a group of over 30 climate, environment and consumer protection organisations voiced their concern that the supervisory group isn’t taking enough action to address climate action.
While the group acknowledged that IAIS is taking steps on the issue, such as monitoring climate change, setting up a disclosure workstreams, and consultations on its updated climate change guidance, they say it is not enough.
“We need to see a faster and stronger response from the global network of insurance regulators in the face of the urgency of the climate crisis,” the letter said.
The group urged the IAIS to take further steps including:
- providing guidance on how supervisors should include environmental risk in supervisory frameworks
- setting expectations for insurance companies to adopt transition plans
- offer guidance to ensure the industry considers climate-related risk implications in solvency positions
- exclude insurance companies that underwrite or invest in new fossil fuel projects from programs supported with public funds
- make sure that supervisors use established climate science when assessing potential impacts of the climate crisis
“IAIS therefore must ensure supervisors implement the necessary prudential policy measures without further delays and in a harmonised way, recognising that climate change represents a systemic risk to financial stability,” the letter said.
This page was last updated November 3, 2023
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