The Geneva Association's new report, Climate Risk Assessment for the Insurance Industry, finds that, for both P&C and life re/insurers, climate change poses different levels of physical and transition risks to both sides of the balance sheet, liabilities and assets.
The task force will continue its work analysing the insurance regulatory landscape related to climate risk and conduct a technical 'deep dive' to develop scenario analysis and qualitative and quantitative tools.
Global re/insurance companies represented on the task force: Achmea, Aegon, AIG, Allianz, Aviva, AXA, Chubb, Daichi Life, Hannover Re, Intact Financial, Manulife, MetLife, Munich Re, Prudential Financial, SCOR, Swiss Re, Tokio Marine.
Climate risk assessment requires qualitative and quantitative approaches over short- and long-term time horizons and must account for uncertainties associated with transitioning. Knowledge sharing across companies and with other stakeholders is critical to raising risk awareness and leveraging all available expertise.
Jad Ariss, Geneva Association Managing Director, said: "In 2020 alone, the world witnessed massive wildfires in California and Australia, historic floods in China and a record hurricane season in the Atlantic. The societal impacts of climate change have become ubiquitous, and individuals and institutions must fully commit now to confronting the climate crisis. Insurers are obvious, strong leaders on global climate action, given their core functions – managing risk and investing – and our industry-led initiative demonstrates that they are proactively rising to the occasion."
Maryam Golnaraghi, Director Climate Change and Emerging Environmental Topics and project leader, said: "This initiative is taking the insurance industry's climate action and collaboration to the next level. Building on lessons learned from previous pilots and initiatives, our task force is focused on advancing climate risk assessment and scenario analysis anchored in companies' decision-making, in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Our first report lays the foundation for us to design and test methodologies and tools – in collaboration with regulators and the scientific community – to converge on robust solutions for P&C and life insurers."