10 August 2017
Key sustainability factors are now recognized as potentially significant for the success, safety and soundness of the insurance sector – inspiring reactions by supervisors and regulators. As a risk manager, risk carrier and investor, the global insurance sector plays a cornerstone role in the management of sustainability-related risks and opportunities. The risk transfer tools of insurance along with the deployment of its long-term capital base are highly relevant for many of the 17 Sustainable Development Goals (SDGs) and the goals of the Paris Agreement on climate change.
The insurance sector is responding to sustainability challenges with strategic action across both underwriting and investment, including through the UN-backed Principles for Sustainable Insurance (PSI). Leading insurers are incorporating environmental factors into the provision of insurance coverage and their underwriting strategies, reallocating capital towards green assets, and integrating environment, social and governance (ESG) factors in asset allocation and stewardship activities. Such approaches are not, however, the norm: only 20% of global premium volume is covered by companies that have signed the PSI.
Policymakers are recognizing that reforms within the financial system as a whole can be helpful to effectively mobilize private capital to respond to sustainability challenges. Global momentum on sustainable finance policy and regulation has advanced significantly, with recent action at the international level such as Financial Stability Board’s Task Force on Climate-related Financial Disclosures (FSB TCFD) and the G20’s Green Finance Study Group (GFSG). A growing number of insurance supervisors and regulators are beginning to incorporate sustainability into the way they oversee the sector.
The goal of the Sustainable Insurance Forum (SIF) is to strengthen insurance supervisors’ and regulators’ understanding of and responses to sustainability challenges for the business of insurance. Convened by UN Environment, the SIF provides a global platform for knowledge sharing, policy dialogue, international collaboration, and identification of best practices. The Forum is working on a six-track work programme in 2017, focusing on disclosure, access and affordability, sustainable insurance roadmaps, climate risks to investments, disaster risk reduction and resilience, and capacity building.
The long-term vision of the SIF is of an insurance sector where sustainability factors are effectively integrated into the regulation and supervision of insurance companies. Looking forward from 2017 to 2020, the SIF will work to achieve this goal by facilitating voluntary action by supervisors, delivering practical content, expanding the SIF network, solidifying partnerships, and supporting implementation.
Download Sustainable Insurance: The Emerging Agenda for Supervisors and Regulators Report (2.35 MB | 50 pages) – Published in August 2017