IAIS reports shows 35% of insurer investments are ‘climate-relevant’

IAIS reports shows 35% of insurer investments are ‘climate-relevant’

The International Association of Insurance Supervisors (IAIS) has published its first report on how insurance sector investments are exposed to climate change, as part of its 2021 Global Insurance Market Report (GIMAR).

“Climate change is the defining challenge for this generation. The GIMAR uses data from our wide membership in combination with analytical tools to understand how the insurance sector is exposed to climate risk,” said Vicky Saporta, IAIS executive committee chair. “The results highlight the benefits of pursuing an orderly transition towards internationally agreed climate targets to minimise the risks to solvency and financial stability.”

Climate change poses material risk to the economy and the financial sector, including the insurance sector. Changes in climate are already leading to more extreme and frequent weather-related events, increasing the physical risks to which insurers are exposed. Insurers will also need to manage their investment exposures to those assets and sectors most vulnerable. Data gathered from 32 IAIS members covering 75% of the global insurance sector represents the first global deep-dive analysis on insurers’ investment exposures and supervisors’ views on climate-related risks. Using the data, scenarios were developed to assess future climate change impacts.

Quantitative data analysis shows that “climate-relevant” assets within equities, corporate bonds, loans and mortgages, sovereign bonds and real estate represent more than 35% of insurers’ total assets. Within equities, corporate bonds and loans and mortgages, most climate-relevant assets relate to the housing and energy-intensive sectors.

“This report underscores the importance for supervisors of assessing how climate change may affect the insurance sector and individual insurers, and of developing an appropriate supervisory response,” said Jonathan Dixon, IAIS secretary general (pictured above). “The IAIS is committed to deepening the breadth and scope of our contributions to helping insurance supervisors mitigate the effects of climate change.”

Read the full report from the IAIS here.


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