Public consultation on climate risk supervisory guidance – part one
The IAIS published its first public consultation on climate risk supervisory guidance in March 2023. This first consultation outlines proposed changes to the ICP Introduction, which positions climate risk within the global framework for insurance supervision. Additionally, the IAIS discusses whether it is necessary to make changes to the existing supporting material related to governance, risk management and internal controls (ICP 7 and 8). Finally, the consultation includes questions seeking stakeholder feedback on the overall climate-related work as it relates to supervisory guidance. This document also provides an update on the overall work programme of the IAIS in promoting a globally consistent supervisory response to climate change within the insurance sector.
Comments on the first public consultation on climate risk supervisory guidance were sought between March 2023 and May 2023 and responses were received from a combination of external stakeholders and IAIS Members. The responses generally supported the proposed changes to refer to climate-related risk within the ICP Introduction, with suggestions to refine the drafting and move the location of the proposed text. The responses were also in favour of making changes to the existing supporting material related to governance, risk management and internal controls (ICP 7 and 8) to provide further guidance for supervisors in selected areas such as clarifying the link between climate-related considerations in variable remuneration, strengthening the role and expertise of the Board, and emphasising the importance of forward-looking assessments of climate-related risks. Further, the responses were supportive of including considerations related to transition planning by insurers within the overall climate-related work programme of the IAIS. The IAIS is considering the comments received in its ongoing work, as follows:
- The draft revisions in the ICP Introduction will be further updated for adoption by end-2024;
- The existing supporting material related to governance, risk management and internal controls (ICP 7 and 8) in the 2021 Application Paper on the Supervision of Climate-related risks in the Insurance Sector will be updated and included in the third public consultation that is expected to be published in March 2024; and
- There was broad support for the IAIS to explore the role of supervisors in relation to transition planning. The IAIS has been engaging the UNDP Sustainable Insurance Forum on this topic and will consider potential collaboration in 2024.
The comments received are available here.