As purveyors and managers of risk, insurers are at the forefront of this challenge. As an integral part of the global ecosystem, insurers also have opportunity to engage with a wide variety of counterparties (such as, investees, insureds, and suppliers) to influence change and drive more sustainable business practices across industries.
Consequently, the journey to Net Zero requires support and effort from all parts of the insurance enterprise: investing, underwriting, operations, reporting and risk management. As such, it is essential insurers adopt a holistic, consistent, integrated risk assessment approach to climate risk that touches all parts of their business.
Climate scenario analysis for the insurance sector
The industry is still in the early stages of its climate scenario development and it has become a priority for many insurers to start to understand and develop best practices. But where do you start?
Our podcast series are dedicated to understanding climate scenario modeling, the different approaches and developing regulations.
Climate Modeling in the Risk Assessment and Strategic Asset Allocation Processes
Translating long-term climate scenarios to short-term market stresses
This paper discusses the ways that standard climate scenarios, like those produced by the Network for Greening the Financial System (NGFS), can be used to create short-term stresses for financial markets.
Climate Risk for Insurers Whitepaper Series
Moody's Analytics thought leadership series on climate risk, helps insurers prepare for the broad set of challenges that climate risk imposes. A series of six free, short and easy to digest papers.
Industry Survey: How prepared are life insurers for including climate risk modeling into their risk assessment and management processes?
Download our industry survey report to find out.
Climate Scenario Analysis is challenging. Insurers need an approach to scenarios which addresses the complexity and uniqueness of their business model.
Moody's Analytics has extensive expertise of scenario modeling and deep domain knowledge of the insurance market and climate risk. Enabling a range of solutions to be offered.
The Climate Pathway Scenario Service
Translates climate pathways into financial risk variables to power insurers’ asset and liability projections to support quantification of the financial impact from physical and transitional risk
As asset owners and managers, insurance companies have historically incorporated a number of ESG factors (most notably governance concerns) into their investment and portfolio management operations. Insurers are continually looking at new performance and benchmark metrics to understand the climate impact on their portfolios.
Typical challenges are:
Climate risk requires insurers to manage a range of emerging risks that will directly and indirectly impact the business and ensure they can monitor these risks across all facets of their business operations. Most notably, this would include their underwriting, investment and supply chain management operations. Insurers are currently focusing their efforts to apply a holistic approach to data and methodology to assess ESG risk performance in order to maintain consistency across the organization.
Typical challenges are:
Insurers are under increasing pressure from multiple stakeholders to address sustainability issues, not least from investors, lenders and regulators for financial disclosures to better understand their resiliency. The Task Force on Climate-Related Disclosure (TCFD) is becoming a global standard for reporting and increasingly many jurisdictions are switching from voluntary to mandatory disclosures. Many regulators are now issuing guidelines to insurers about their expectations for financial disclosure and intend to switch from a supporting to supervisory role over the next 2-3 years.
Typical challenges are:
Whitepapers
Translating long-term climate scenarios to short-term market stresses
The Economic Impact of Net Zero in the EU
Quantifying the Impact of Climate on Corporate Credit Risk
Climate Risk for Insurers Series
Climate disclosure: best practice, regulatory, and TCFD
Shining a spotlight on scenario analysis and climate risk
Articles
The Winners and Losers of Climate Transition
Achieving a Balanced View of Climate Risk
How to Choose the Right Climate Model
Expanding Beyond the Network for Greening the Financial System (NGFS) – What are we Missing?
Analyzing and Attributing Climate Change Impacts on Asset Returns
Considering Climate Risk Uncertainty in Portfolio Construction
Climate Scenario Analysis for the Life Insurance Sector
Climate Adoption into Insurance Risk Management and Reporting
Speak to our team of experts to learn more and discuss how Moody's Analytics can help with your
