The world’s largest insurers have joined forces to develop a new generation of risk assessment tools that will enable the insurance industry to better understand the impacts of climate change on their business, the UN Environment’s Finance Initiative (UNEP FI) has announced.
Insurance Australia Group (IAG) and QBE have allied with 14 other insurers to form a pilot group that will develop analytical tools designed to pioneer insurance-industry climate-risk disclosures that are in line with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
Erik Solheim, UN Environment chief, said the global collaboration aims “to understand and reduce risk, to seize unprecedented business opportunities in climate action, and to ensure an insurable, resilient, and sustainable world.”
The insurer group, representing around 10% of world premium and US$5 trillion in assets under management, will make use of the latest scenario analysis to jointly develop and pilot the tools and indicators that will assess climate-related physical and transition risks in their core insurance portfolios and products.
“The more insurers understand climate risks facing the economy, the more they can make prudent decisions in managing risk and serving their clients, and the more efficient and stable our markets will become,” said Michael Bloomberg, chair of the Task Force and UN special Envoy for Climate Action. “The pioneering work of this group will pave the way for greater climate risk transparency and climate action by the global insurance industry, and it’s great to see that it’s consistent with our task force’s recommendations."
The insurer group also includes Allianz, AXA, IAG, Intact Financial Corporation, Länsförsäkringar Sak, MAPFRE, MS&AD, Munich Re, NN Group, Sompo Japan Nipponkoa, Storebrand, Swiss Re, TD Insurance, The Co-operators, and Tokio Marine & Nichido.