EIOPA's Climate Change Scenarios in ORSA

Public statement on the monitoring exercise on the use of climate change scenarios in the ORSA

Introduction

The European Insurance and Occupational Pensions Authority (EIOPA) has released a public statement detailing the findings of its monitoring exercise on how European (re)insurers are integrating climate change-related risks into their Own Risk and Solvency Assessment (ORSA). This initiative follows EIOPA's 2021 Opinion on the supervision of climate change risk scenarios in ORSA and subsequent application guidance aimed at establishing consistent practices.

Background

Climate change poses significant risks to the insurance sector, affecting both underwriting and investment activities. Recognizing this, EIOPA has been proactive in guiding (re)insurers to incorporate climate change scenarios into their risk management frameworks. The ORSA process is a critical tool for insurers to assess their risk profile and ensure they hold sufficient capital to cover potential losses.

Key Findings

The monitoring exercise revealed varying levels of integration of climate change scenarios across the industry. While some insurers have made significant progress, others are still in the early stages of incorporating these risks into their ORSA processes. EIOPA emphasizes the importance of a consistent approach to ensure the resilience of the insurance sector in the face of climate change.

Challenges and Recommendations

Insurers face several challenges in integrating climate change scenarios, including data availability, scenario selection, and the complexity of modeling long-term impacts. EIOPA recommends that insurers leverage existing resources and collaborate with stakeholders to enhance their understanding and management of climate-related risks.

Conclusion

EIOPA's monitoring exercise underscores the need for continued efforts to integrate climate change scenarios into the ORSA process. As climate risks continue to evolve, insurers must remain vigilant and proactive in adapting their risk management practices.

Quelques pistes pour l'intégration opérationnelle dans votre dispositif :

- Évaluer régulièrement l'impact des scénarios climatiques sur le profil de risque de l'entreprise.

- Collaborer avec des experts pour améliorer la modélisation des risques climatiques.

- Intégrer les scénarios climatiques dans les processus décisionnels stratégiques.

- Former le personnel sur les enjeux liés aux risques climatiques.

- Mettre à jour les politiques de gestion des risques pour inclure les considérations climatiques.