Since its inception, the SIF has evolved into a dynamic process for collaborative action on climate issues. This has resulted in research on emerging risks, knowledge sharing on supervisory practices, high-level policy engagement, and joint supervisory statements.
In 2017 the SIF conducted a range of collaborative and bilateral engagements relating to sustainability issues.
Disclosure: The SIF delivered a formal response to the public consultation on the Recommendations of the Financial Stability Board Task Force on Climate-Related Financial Disclosures in February 2017, and released a joint statement welcoming the final recommendations and guidance of the TCFD in July 2017 – highlighting key areas where supervisors play a role in supporting uptake by the insurance sector.
Sustainable Insurance Roadmapping: The SIF Secretariat worked with Morocco’s insurance supervisor to implement a national roadmap for sustainable finance into the insurance sector, drawing on international best practices and supporting a convening of national stakeholders.
Knowledge sharing: The SIF facilitated a survey and knowledge sharing programme on methodologies and approaches to assessing climate-related risks to insurance firms, including stress testing and scenario analysis of investment portfolios.
Issues Paper: During 2018 the SIF focused its efforts on climate-related issues, culminating with the release of a joint SIF/IAIS Issues Paper on Climate Change Risks to the Insurance Sector.The first analysis of climate change risk by an international financial standards authority, the Issues Paper provides an overview of how climate change is currently affecting and may affect the insurance sector now and in the future, includes examples of current material risks and impacts across underwriting and investment activities, and describes how these risks and impacts may be of relevance for the supervision and regulation of the sector. The paper is ground-breaking in confirming that climate risks warrant “ongoing and intensifying scrutiny” by supervisors.
Mainstreaming Climate Risks in Supervisory Practices: In addition, the SIF worked internally during 2018 to develop practical tools to support supervisors’ efforts to consider climate change risks in everyday supervision. This included the development of shared resources for use across a range of on- and off-site supervisory engagements, and other non-standard activities (i.e. surveys, research reports).
In 2019, the SIF worked to support its members mainstream climate and sustainability issues into supervisory practices.
Global Survey on TCFD Implementation: During Q1 and Q2 2019, SIF members implemented a coordinated global survey on TCFD implementation by insurers in their markets. The objective of the survey was to gather information on levels of awareness, understanding, and action relating to the TCFD Recommendations by insurers. The results of this survey were articulated in the TCFD Implementation Paper paper which was published in February 2020.
Mainstreaming Climate Risks in Supervisory Practices: Following from work in 2018, SIF members applied a Question Bank to strengthen the examination of how regulated entities are responding to climate change risks and opportunities. The Question Bank provided a framework, and offered sample questions which supervisors could adapt for use in their own jurisdictions. The SIF also engaged with the NGFS to explore how the Question Bank could be applied to other sectors such as banking.
Research on Stress Testing: The SIF worked with the Financial Stability Institute of the Bank for International Settlements and in November 2019 published an FSI Insights paper on insurance stress testing and climate change risks. The paper compared risk quantification requirements that insurance regulators impose on insurers in relation to climate change risks; and reviewed how insurance supervisors quantify such risks themselves.
In 2020, SIF has hosted the Eighth meeting of the Sustainable Insurance Forum (SIF8) on 21st February 2020 in Basel and two online virtual meetings on 6th and 20th May, instead of its SIF9 meeting planned to be held in Seattle in June 2020, due to Covid-19.
SIF has launched the public version of the ‘Question Bank on Climate Change Risks to the Insurance Sector’. The broader community will now have access to the types of questions that supervisors may use to probe entities on climate change financial risks. These questions may also be relevant to other industries, such as the banking sector.
SIF and the International Association of Insurance Supervisors (IAIS) collaborated on the 'Issues Paper on the Implementation of the Recommendations of the Task Force on Climate-related Financial Disclosures’. The paper was noted to be a valuable resource for supervisors taking action to enhance disclosures on climate-related financial risks. Since its launch on the IAIS website, the Paper has been downloaded from the IAIS website over 2,500 times.
As a follow-up, the SIF and IAIS are now developing an Application Paper on the Supervision of Climate-related Risks in the Insurance Sector. The paper will focus specifically on topics such as enterprise risk management, corporate governance, investment and disclosure, in line with the Insurance Core Principles. On 9 June, the IAIS and SIF jointly hosted a webinar supporting the development of the Application Paper. It was very well attended by 300 members and stakeholders who participated in the webinar. The inputs received will be used to further develop the Paper, which is expected to be launched in early 2021.