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).
Going forward in 2019, the SIF is working 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 this survey is to gather information on levels of awareness, understanding, and action relating to the TCFD Recommendations by insurers. The results of this survey will be used to inform a forthcoming Issues Paper on TCFD Implementation paper, complementing other sources of information and data, and engagement with relevant market stakeholders, organizations, and coalitions.
Mainstreaming Climate Risks in Supervisory Practices: Following from work in 2018, SIF members are now applying a Question Bank to strengthen examination of how regulated entities are responding to climate change risks and opportunities. The Question Bank provides a framework, and example questions, which supervisors can adapt for use in their own jurisdictions. The SIF is also engaging with the NGFS to explore how the Question Bank could be applied to other sectors (i.e. banking).
Research on Stress Testing: The SIF is working with the Financial Stability Institute of the Bank for International Settlements to develop an FSI Insights paper on insurance stress testing and climate change risks. The main objectives of this FSI Insights Paper are to: i) compare risk quantification requirements that insurance regulators impose on insurers in relation to climate change risks; and ii) to review how insurance supervisors quantify such risks themselves. Publication of the paper is expected in November 2019.