The Geneva Association has established a new task force comprised of members of the P&C and life insurance industries to help develop climate risk assessment methodologies and tools.
Experts from 17 of the world’s largest P&C and life insurers will comprise the new task force, which will engage with regulators, supervisors, rating agencies, and the scientific community to identify the most appropriate approaches to mitigate climate risk.
The global re/insurance companies represented on the task force include Achmea, Aegon, AIG, Allianz, Aviva, AXA, Chubb, Daichi Life, Hannover Re, Intact Financial, Manulife, MetLife, Munich Re, Prudential Financial, SCOR, Swiss Re, and Tokio Marine.
The task force has also released its new report, “Climate Risk Assessment for the Insurance Industry,” which found 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 report is meant to serve as a foundation for the association to design and test methodologies and tools for the insurance industry.
The report concluded that climate risk assessment requires qualitative and quantitative approaches over short- and long-term time horizons and must account for uncertainties associated with transitioning. It also noted that knowledge sharing across companies and with other stakeholders is critical to raising risk awareness.
“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,” said Geneva Association managing director Jad Ariss.
Ariss also noted that 2020 already saw a host of climate-related catastrophes, with “massive wildfires in California and Australia, historic floods in China and a record hurricane season in the Atlantic.”
"This initiative is taking the insurance industry's climate action and collaboration to the next level,” said Geneva Association director of climate change and emerging environmental topics Maryam Golnaraghi. “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).”