Insurance regulators from around the world address climate risk

News: 2017 Press Release

SACRAMENTO, Calif. — Insurance regulators from around the world, at an international conference chaired by California Insurance Commissioner Dave Jones, met in Kuala Lumpur, Malaysia to develop regulatory responses to climate risk. Jones is a founding member and chairperson of the Sustainable Insurance Forum (SIF), which is a working group of insurance supervisors from countries around the world which was formed to share and develop best practices among regulators related to sustainable insurance and in particular, risks to the business of insurance posed by climate change.

Insurance supervisors and regulators from Australia, Brazil, California, France, Malaysia, Morocco, the Netherlands, Singapore, South Africa, the United Kingdom, and Washington, as well as the International Association of Insurance Supervisors (IAIS), attended the SIF Fall Meeting (SIF Membership also includes Argentina, Ghana, Italy, Jamaica, Japan, Sweden, Pakistan, Portugal, and Philippines), which included presentations by various countries' insurance regulators on new climate risk disclosure requirements, and climate risk stress testing for insurers designed to better understand the climate related underwriting and financial risks faced by insurers.

"I will continue to work with insurance regulators from other nations to address climate risks and other insurance sustainability issues," said California Insurance Commissioner Dave Jones. "As a financial regulator, it is important that financial institutions, including insurance companies, recognize and address potentially significant climate risks facing their investments in coal, oil, gas and utilities as the world continues to move away from the carbon economy."

Following the successful launch of the SIF in December 2016, participating countries and states established a six-track work program of activities, including a focus on disclosure, access to insurance, sustainable insurance road maps, climate risk, disaster risk reduction, and capacity building for insurance supervisors. The meeting brings together representatives from all over the world to share updates on progress across the SIF work program and identify strategic priorities for work streams for the remainder of the year. California Insurance Commissioner Dave Jones led the effort to found the SIF, and as the Chair of the organization, he led the multi-day meeting in Kuala Lumpur, Malaysia. Climate change poses risks to the underwriting, investments and business operations of insurers. Jones has required insurers to disclose how they are addressing climate risk and specifically disclose their investments in coal, oil, gas and utilities because of the risk that those investments will become "stranded assets" as markets and governments reduce reliance on carbon based energy.


Media Notes:

• The meeting was held at the Lanai Kijang Conference Facility, Kuala Lumpur, Malaysia.
• As regulator of the largest insurance market in the United States, Insurance Commissioner Dave Jones leads a national, multi-state insurance regulators group that surveys annually more than 1,000 companies regarding their response to climate risk, capturing approximately 73 percent of the entire U.S. insurance market. In January 2016, Jones launched the Climate Risk Carbon Initiative to enable the industry, regulators, consumers and investors to assess climate risks posed for insurers' investments in fossil fuel holdings and thermal coal enterprises. Commissioner Jones is the first insurance regulator in the nation to call on insurance companies to divest from thermal coal. Jones is also the first to announce that he will require insurance companies to provide detailed and public disclosures of their investments in the carbon economy. The data received will be used to better inform regulators, interested members of the public, and the insurance companies themselves on the extent to which they hold carbon investments facing potential climate risk. The information also enhances regulators' future in-depth financial analysis and financial examinations of insurers with regard to climate risk. More information on the Climate Risk Carbon Initiative.
• UN Environment's Principles for Sustainable Insurance: The Principles for Sustainable Insurance (PSI) serve as a global framework for the insurance industry to address environmental, social and governance risks and opportunities, and to strengthen its contribution to building resilient, inclusive and sustainable communities and economies. Endorsed by the UN Secretary-General and insurance CEOs, the PSI was launched at the 2012 UN Conference on Sustainable Development and is the largest collaborative initiative between the UN and the insurance industry. Nearly 100 organizations worldwide have adopted the PSI, including insurers representing more than 20 percent of world premium volume and USD 14 trillion in assets under management. More information on the PSI is at: www.unepfi.org/psi or from: butch.bacani@unep.org.
• UN Environment's Inquiry into the Design of a Sustainable Financial System: The Inquiry into the Design of a Sustainable Financial System has been initiated by the United Nations Environment Programme (UNEP) to advance policy options to improve the financial system's effectiveness in mobilizing capital towards a green and inclusive economy—in other words, sustainable development. Established in January 2014, it published the first edition of 'The Financial System We Need' in October 2015, and the second edition 'From Momentum to Transformation' in October 2016. The Inquiry's mandate currently extends to the end of 2017, with work focused on deepening and taking forward its findings. More information on the Inquiry is at: www.unep.org/inquiry/ and www.unepinquiry.org or from nick.robins@unep.org.  

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