Insurance Europe has responded to a consultation by the Financial Stability Board (FSB), saying that there is no evidence to say that insurers are particularly vulnerable to system-wide impacts from climate change.
The federation that presents the European insurance market said in an eight-page response said that systemic risk emanating from climate change is neither faced nor transmitted by insurers, but by society as a whole.
It said: “The FSB, standard-setters and supervisors should take into account the developments in reporting and availability of consistent climate-related data from the real economy, and avoid repetitions and inconsistencies with existing or upcoming initiatives. Furthermore, a truly global risk like climate change demands a globally coordinated approach.”
It added: “Tools such as stress tests, which are still exploratory in nature, should only be used to identify indications for relevant issues and require further work before being used to draw conclusions. It is important to avoid false accuracy, over-complication and granularity by focusing on materiality to avoid placing excessive burdens on insurers. It is too early to develop new tools for the insurance sector other than continuing the development of monitoring tools, such as climate stress tests.”
However, Insurance Europe was broadly supportive of the FSB’s aims.
It wrote: “The European insurance industry welcomes the intent of the FSB Interim Report to achieve cross-sectoral consistency and to consider interactions between sectors, in line with the FSB roadmap for addressing climate-related financial risks. A truly global risk like climate change demands a globally coordinated approach. As the FSB roadmap notes, policymaking requires, as general pre-conditions in particular, reliable information, appropriate diagnostics, and effective policy instruments.”
It added: “In a similar vein, pre-conditions are required for private institutions to duly take account of climate-related risks in their risk management. Insurance Europe remains convinced that the FSB has a major role to play in helping realise these pre-conditions.”
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