Public consultation on climate risk supervisory guidance – ICP guidance and supporting material
The consultation closed on 19 June 2024.
Background information
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 climate-related risks 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
This third consultation on climate risk in the insurance sector includes proposed changes in selected ICP guidance and supporting material to reflect climate risk. It covers issues related to corporate governance, risk management and internal controls, valuation of assets and liabilities for solvency purposes, investment activities of insurers and insurers’ enterprise risk management framework. The proposed changes to the materials are reflected in the following documents:
- ICP guidance material includes proposed additions to assist supervisors in considering climate-related aspects of ICP 15 (Investments) and ICP 16 (Enterprise Risk Management for Solvency Purposes).
- Supporting material includes draft language in the form of application paper material. It incorporates:
- Updates to existing material from the 2021 Application Paper on the Supervision of Climate-related risks in the Insurance Sector, related to corporate governance, risk management and internal controls (ICPs 7 and 8), investments (ICP 15) and enterprise risk management for solvency purposes (ICP 16).
- Newly developed material on valuation of assets and liabilities for solvency purposes (ICP 14).
The IAIS adopted the changes to the guidance material in ICP 15 and 16 on 5 December 2024, and these are available here. The full set of consultation comments received to the guidance material in ICP 15 and 16, and the summary of consultation comments on and their resolution, are available at the bottom of this page.
As a reminder, ICP guidance material aims to facilitate the understanding and application of the ICPs (its Principle Statements and Standards) by including recommendations, clarifications and examples. Application papers offer further advice, illustrations, recommendations or examples of good practice to supervisors on implementing the ICPs. Neither of these materials represent any new requirements, as the ICPs are written to address the broad variety of risks related to insurance, including climate-related risks.
On 19 June 2024, the public consultation on climate risk supervisory guidance – ICP guidance and supporting material closed. The IAIS is in the process of reviewing the comments received on the supporting material. The IAIS will respond comprehensively to the supporting material related comments at the end of the project.
A public background session was held via webinar on 15 April 2024 to present the consultation material and answer questions from stakeholders. A recording of the session can be found here.