The European Insurance and Occupational Pensions Authority (EIOPA) published today a staff paper on nature-related risks – such as biodiversity loss and damage to ecosystems – and their relevance to insurance.
Protecting nature’s biodiversity and ecosystems has in recent years emerged as an important aspect in the fight against climate change. The failure to account for, mitigate and adapt to the consequences of nature loss can have economic implications that may put overall financial stability at risk.
In this context, EIOPA believes it is important to gain a better understanding of how nature-related risks can affect (re)insurers and to examine ways in which the insurance sector can meaningfully contribute to the conservation and restoration of nature through investments and underwriting activity.
The staff paper describes how nature-related risks can translate into risks for (re)insurers’ assets and liabilities. The paper sets out a framework to identify key areas in supervisory and regulatory activity that require attention when addressing nature-related risks and their impacts on the insurance sector.
Next steps
This first step will inform EIOPA’s future initiatives which will aim at identifying relevant data sets and tools for risk assessments. EIOPA supports open access to data and the development of scenarios and modelling so that supervisors and undertakings may conduct materiality assessments for nature-related risks as well as their impacts.