EIOPA announces its sustainable finance activities for the next three years

The European Insurance and Occupational Pensions (EIOPA) is organizing today its 5th roundtable on sustainable finance which brings together representatives of regulators, industry, consumer organizations and academia to discuss the resilience of society to the risks of sustainability, the role of insurers and pensions and the work of EIOPA in this area. .

On this occasion, EIOPA announced its three-year plan which will help mainstream sustainable finance into all areas of its own work. From 2022-2024, EIOPA has defined its main areas of activity:

  • Integration of sustainability risks into the prudential framework of insurers and pension funds by developing proposals for prudential reporting of climate risks in Solvency II, by analyzing the prudential treatment under Solvency II of assets and / or activities associated with environmental objectives and / or social. EIOPA also plans to report on underwriting practices and prudential treatment of the integration of climate change adaptation measures into non-life insurance products.

  • Consolidation of the macro / micro-prudential risk assessment of sustainability risks in tools and methodologies by performing an analysis on the physical risk following a previous analysis on the transition risk and by developing methodological principles of simulation insurance crisis against climate change.

  • Promoting sustainability disclosures and a framework for sustainable business conduct by providing guidance on disclosures under the Sustainable Finance Disclosure Regulation and Taxonomy Regulation as well as on the application of provisions related to the sustainability in the insurance sales process and advice to the European Commission on measures to combat greenwashing.

  • Support sustainability risk oversight and surveillance convergence in the EU by issuing application guidelines and conducting a pilot exercise on overseeing the use of climate change risk scenarios in ORSA, by carrying out an analysis of the costs and past performance of sustainability products and providing guidance on the oversight of ESG conduct risks, including greenwashing.

  • Filling the protection gaps by completing the Insurance Protection Gaps for Natural Disasters Dashboard, analyzing consumer behavior and contractual conditions for natural disaster insurance coverage.

  • Promoting the use of open source modeling and data in relation to climate change risks by analyzing opportunities to use open source modeling tools for natural disasters and developing ways to improve the collection of Uniform and comprehensive data on insured losses.

  • Contribution to international convergence for sustainability risk assessment and management through international dialogues and sustainability forums

At the same time, EIOPA is launching a pilot exercise on adaptation to climate change in non-life underwriting and invites interested insurers to join it. The exercise will help EIOPA assess the relevance of the prudential treatment of climate-related adaptation measures in technical provisions and solvency capital requirements for non-life underwriting risks under Solvency II. In addition, it will contribute to a better understanding of how insurers integrate climate-related adaptation measures into non-life insurance products.

Sustainable finance remains one of EIOPA’s priorities. EIOPA’s work will continue to be evidence-based and will help insurers and pension funds, as managers of much of the company’s risk and important long-term investors, to strengthen their role in mitigating and adapting to the risks posed by climate change. At the same time, it should support the transition to a more sustainable and resilient economy.

Background

The main areas of activity build on the deliverables of EIOPA on sustainable finance since 2018 and are reflected in the European Commission strategy for financing the transition to a sustainable economy and the strategy for adapting to change climate.

Disclaimer

EIOPA – European Insurance and Occupational Pensions Authority published this content on December 07, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 07 December 2021 10:41:04 AM UTC.


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Richard V. Johnson