The European Insurance and Occupational Pensions Authority (EIOPA) has issued a public statement on the findings of a monitoring exercise exploring how (re)insurers in Europe are integrating climate change-related risks in their Own Risk and Solvency Assessment (ORSA). The exercise follows EIOPA’s 2021 Opinion on the supervision of climate change risk scenarios in ORSA, as well as a related application guidance aimed at establishing consistent practices.
The results of the monitoring exercise show that insurers have made important progress in integrating climate change-related risks into their risk management frameworks. Most insurers in the scope of the exercise now include climate change risk assessments in their ORSAs, covering both physical and transition risks. The (re)insurers surveyed are also making greater use of scenario analysis to assess the potential financial impacts of these risks. In a growing number of cases, climate change assessments are linked to defined management actions and are being taken into account in strategic decision-making.
The exercise has also highlighted important challenges, including significant variations in approaches across jurisdictions, limited availability of high-quality, reliable and granular data, and the difficulty of extending the time horizon of analyses beyond what is typical for ORSA.
Supervisory practices are evolving and vary in maturity across member states. Many national supervisory authorities are actively strengthening their methodologies and capacity in this area.
EIOPA remains committed to supporting supervisory convergence and capacity building in this important field and will continue to develop activities to this end.