Public consultation on climate risk supervisory guidance – part one
The consultation closed on 16 May 2023.
Climate change is a key strategic theme for the IAIS as it is a source of financial risk, which impacts the resilience of individual insurers and could lead to financial stability risk. An adequate response from supervisors to both the risks and business activity related to climate change will support the objectives of insurance supervision of protecting policyholders, contributing to financial stability and promoting the maintenance of a fair, safe and stable insurance market.
To promote a globally consistent approach and address any gaps in the global framework for insurance supervision, the IAIS is conducting a series of four public consultations on proposed changes to guidance in various Insurance Core Principles (ICPs) and on new supporting material to better incorporate climate risk.
To learn more about the other climate risk consultations, the other IAIS work in relation to climate risk, including our work on financial stability analysis and on capacity building, visit our dedicated page on climate risk.
Consultation
The IAIS published its first public consultation on climate risk supervisory guidance in March 2023. This first consultation outlined proposed changes to the ICP Introduction, which positions climate risk within the global framework for insurance supervision. Additionally, the IAIS discussed whether it is necessary to make changes to the existing supporting material related to governance, risk management and internal controls (ICP 7 and 8). Finally, the consultation included questions seeking stakeholder feedback on the overall climate-related work as it relates to supervisory guidance. This document also provided an update on the overall work programme of the IAIS in promoting a globally consistent supervisory response to climate change within the insurance sector.
Comments on the first public consultation on climate risk supervisory guidance were sought between March 2023 and May 2023 and responses were received from a combination of external stakeholders and IAIS Members. The full set of consultation comments received are available at the bottom of this page. The responses generally supported the proposed changes to refer to climate-related risk within the ICP Introduction, with suggestions to refine the drafting and move the location of the proposed text. The responses were also in favour of making changes to the existing supporting material related to governance, risk management and internal controls (ICP 7 and 8) to provide further guidance for supervisors in selected areas such as clarifying the link between climate-related considerations in variable remuneration, strengthening the role and expertise of the Board, and emphasising the importance of forward-looking assessments of climate-related risks. Further, the responses were supportive of including considerations related to transition planning by insurers within the overall climate-related work programme of the IAIS. The IAIS has considered the comments received in its ongoing work, as follows:
- The IAIS adopted the changes to the ICP Introduction on 5 December 2024, and these are available here. The summary of consultation comments related to ICP Introduction and their resolution, are available at the bottom of this page.
- The existing supporting material related to governance, risk management and internal controls (ICP 7 and 8) in the 2021 Application Paper on the Supervision of Climate-related risks in the Insurance Sector was updated and included in the third public consultation that was published in March 2024