The intersection of nature and insurance presents a significant opportunity to drive sustainability and resilience. The insurance sector plays a crucial role in funding ecosystem restoration, enhancing community resilience, and supporting biodiversity investments. By protecting assets, reducing liabilities, and attracting capital from financial markets, insurance can help mitigate environmental risks while fostering long-term sustainability. This connection is essential for reducing financial risks associated with nature loss and ensuring a more resilient future.
Archives: Publications
Integration of Climate-related Risks within Insurance Supervisory Frameworks
The Integration of climate-related risks within insurance supervisory frameworks report highlights the latest conceptual thinking and practices of insurance supervisors on integration of climate considerations in insurance supervisory frameworks. Between late 2023 to early 2024, the SIF Secretariat conducted a survey amongst the SIF members, as a follow-up to its work in 2022- 23. The survey received responses from 30 SIF members, representing 79% of SIF’s members.
This latest survey delves deeper into different usage and aspects of supervisory frameworks that consider climate-related risks in assessing an insurer’s overall risk profile, namely:
- Governance requirements
- Own Risk and Solvency Assessment (ORSA) practices
- Capital add-ons
- Macroprudential policies
In addition, the report highlights current prioritisation by regulators and supervisors and the progress in integrating climate-related risks within insurance supervisory frameworks. It also offers insights into existing international efforts in this area.
Integration of Climate-related Risks in Insurance Regulatory Capital Frameworks
The Integration of climate-related risks in insurance regulatory capital frameworks report reflects the current practices of insurance regulators on the integration of climate-related risks in insurance regulatory capital frameworks. In 2024, the SIF Secretariat conducted a survey amongst the SIF members, as a follow-up to its work in 2022-23. The survey received responses from 31 SIF members (82 percent of its membership).
SIF Overarching Note for CSWG Reports
UNDP’s Sustainable Insurance Forum (SIF) is pleased to present two reports that describe the current landscape on the integration of climate-related considerations into insurance supervisory and regulatory capital frameworks. These reports, based on surveys conducted by SIF in late 2023 and 2024, offer insights into the existing and evolving practices and approaches adopted by insurance supervisors and regulators.
SUPERVISORY THINKING ON INSURANCE-RELATED CLIMATE TRANSITION PLANS | Analysis based on SIF’s Transition Plans Working Group (TPWG) Survey, 2024
UNDP’s Sustainable Insurance Forum (SIF) released a pivotal report titled Supervisory Thinking on Insurance-related Climate Transition Plans. This comprehensive document offers valuable insights into the current supervisory landscape regarding transition plans and highlights the challenges in developing regulatory guidance for the insurance sector as it shifts toward a net-zero future.
The report outlines several key findings:
• Early-Stage Supervisory Thinking: Insurance supervisors are in the early stages of conceptual thinking around insurers’ transition plans. While these plans are recognized as essential components of risk management, specific requirements and guidance are yet to be established by most supervisory authorities.
• Complexity in Regulatory Development: The report identifies challenges in formulating supervisory requirements for transition plans. These include uncertainties surrounding the roles of financial regulators and supervisors, issues related to data adequacy and accessibility, and the absence of internationally standardized guidance.
• Support for Insurers’ Transition: It emphasizes that supervisors can facilitate insurers’ progress toward net-zero by providing clear guidance on metrics, enhancing capacity building, and improving access to relevant data.
The report also proposes essential next steps for insurance supervisors, which include:
• Enhancing coordination among authorities to share best practices and align frameworks.
• Advocating for the establishment of an international baseline and consistent global guidance.
• Assisting regulated entities in overcoming data-related challenges.
• Collaborating with the insurance sector to pool resources for capacity-building initiatives.
Summary of the Transition Plans Working Group Report, October, 2024
UNDP’s Sustainable Insurance Forum (SIF) released a pivotal report titled Supervisory Thinking on Insurance-related Climate Transition Plans. This comprehensive document offers valuable insights into the current supervisory landscape regarding transition plans and highlights the challenges in developing regulatory guidance for the insurance sector as it shifts toward a net-zero future.
The report outlines several key findings:
• Early-Stage Supervisory Thinking: Insurance supervisors are in the early stages of conceptual thinking around insurers’ transition plans. While these plans are recognized as essential components of risk management, specific requirements and guidance are yet to be established by most supervisory authorities.
• Complexity in Regulatory Development: The report identifies challenges in formulating supervisory requirements for transition plans. These include uncertainties surrounding the roles of financial regulators and supervisors, issues related to data adequacy and accessibility, and the absence of internationally standardized guidance.
• Support for Insurers’ Transition: It emphasizes that supervisors can facilitate insurers’ progress toward net-zero by providing clear guidance on metrics, enhancing capacity building, and improving access to relevant data.
The report also proposes essential next steps for insurance supervisors, which include:
• Enhancing coordination among authorities to share best practices and align frameworks.
• Advocating for the establishment of an international baseline and consistent global guidance.
• Assisting regulated entities in overcoming data-related challenges.
• Collaborating with the insurance sector to pool resources for capacity-building initiatives.
SIF Implementation of TCFD Recommendations by Insurance Supervisors and Regulators
The UNDP Sustainable Insurance Forum (SIF) has published a paper outlining supervisory and regulatory practices in implementing the Taskforce for Climate-related Financial Disclosures (TCFD) recommendations. This paper builds upon the SIF’s recognition of the TCFD recommendations as the preeminent disclosure framework for climate-related risks.
The paper highlights the improvements in the quantity, quality and comparability of climate-related disclosures observed through the implementation of the TCFD recommendations.
The SIF paper condenses the learnings from the current practices of SIF members in implementing the TCFD recommendations in their own jurisdictions, including using the information available in supervisory activities. Case studies from SIF members provide more detailed insights into the ways in which supervisors and regulators are encouraging voluntary TCFD-aligned disclosures and mandating requirements for such disclosures.
SIF Scoping Study: Nature-related Risks in the Global Insurance Sector
The UNDP Sustainable Insurance Forum (SIF) has published the ‘SIF Scoping Study: Nature-related Risks in the Global Insurance Sector’. This study marks a pioneering effort to explore and understand the global insurance sector’s dependence on nature, what nature-related risks could be, and whether and how nature-related risks are financially material to the sector’s underwriting and investing business.
The SIF members and partners; experts and industry participants have contributed to this scoping study. The study has employed a mixed research methodology and a survey of 108 insurance sector participants from 32 countries, 57 percent of whom were insurers and reinsurers, 10 percent insurance industry associations and 5 percent insurance brokers. It seeks to gauge the financial risks of nature-related loss and assess how insurance supervisors and insurance companies are responding to these risks.
Funded by the Executive Office of the Secretary-General of the United Nations and Sustainable Finance Ireland, this report has been commissioned by the SIF Secretariat, and authored by Prajwal Baral.
SIF/IAIS Application Paper on the Supervision of Climate-Related Risks in the Insurance Sector
The United Nations-convened Sustainable Insurance Forum (SIF) in partnership with the International Association of Insurance Supervisors (IAIS), has published the Application Paper on the Supervision of Climate-related Risks in the Insurance Sector. The Paper provides insurance supervisors with concrete tools to further strengthen their efforts in assessing and addressing risks from climate change. It also sets out recommendations and examples of good practice consistent with the IAIS Insurance Core Principles (ICPs).
The following topics are in scope of the Paper:
- Supervisory Review and Reporting
- Corporate Governance
- Risk Management, including scenario analysis and stress testing
- Investments
- Disclosures.
The publication of the Application Paper follows a 90-day consultation period during wich 25 stakeholders and members gave valuable input resulting in various improvements to the draft Paper. The outcome of the consultation can be accessed here.
Interested stakeholders are invited to a webinar providing more background on the Paper and a question and answer session on 9 June, from 13.00 – 14.00 CEST. More information and a registration link can be found here.
SIF January to June 2020 Update
The Sustainable Insurance Forum’s half-yearly report lays out its myriad successes in the first six months of the year, despite the catastrophic disruption caused by COVID. The report includes updates from 14 of its members and highlights the need to keep the sustainability agenda and climate change at the forefront of discussions and decisions about how best to deal with a post-COVID regulatory landscape.
