Insurers will ramp up efforts as regulation and disclosure goes global.
The insurance industry has a multi-faceted role to play in managing climate change: modelling and understanding climate risk, underwriting for adaptation and a greener economy and as an institutional investor.
In 2020, as insurers and banks ramp up their efforts to identify and manage climate risk more strategically in line with the PRA's supervisory statement SS3/19, many are expected to adopt TCFD recommended disclosures (Task Force on Climate-Related Financial Disclosures). Further efforts will no doubt be required as financial supervisors worldwide consult on regulation of climate risk – for example, through the Network for Greening the Financial System – and best practice on disclosure and risk management begin to emerge. Mark Carney's appointment as UN special envoy for climate action and finance will raise the profile and ambition of finance for resilience still further and support the evolution of new frameworks for financial reporting and risk management.
Against this backdrop, we predict that in the run-up to COP26 in Glasgow, the combination of social expectation, regulatory pressure and commercial opportunity will align to make climate change a defining issue for insurers in 2020.
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