Insurance Europe has responded to a consultation by the Financial Stability Board (FSB) on its consultative report on supervisory and regulatory approaches to climate-related risk.
There is no evidence to say that insurers are particularly vulnerable to system-wide impacts from climate change. Systemic risk emanating from climate change is neither faced nor transmitted by insurers: rather, it is faced by society as a whole.
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.
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.