EIOPA Consults on Non-Life Underwriting and Pricing for Climate Risk
EIOPA published a discussion paper that highlights challenges associated with the current non-life underwriting practices and options to ensure the availability and affordability of insurance products, in the context of climate change. The discussion paper is built on work stemming from the 2019 Opinion on sustainability within Solvency II and is part of the overall sustainable finance agenda of EIOPA. The regulator is inviting comments on the discussion paper until February 26, 2021. EIOPA will consider the feedback received and finalize its report in the Spring of 2021.
The discussion paper aims at highlighting the challenges associated with short-term non-life contracts and annual re-pricing using past natural catastrophes events and the impact of climate change on the premium, affordability, and protection gap. The discussion paper also identifies how insurers could address the protection gap issues in the context of climate change and contribute to climate change mitigation and adaptation. EIOPA has, therefore, introduced the concept of Impact Underwriting. The discussion paper explains that insurers and reinsurers can contribute to climate adaptation and mitigation by incentivizing policyholders to mitigate insured risks via risk-based pricing and contractual terms and by considering, in their underwriting strategy, measures that contribute to climate change adaptation or mitigation. The paper also presents a number of concrete options to ensure availability and affordability of insurance in light of climate change, with the Annex providing a number of case studies chosen by the insurance associations.
Related Links
Comment Due Date: February 26, 2021
Keywords: Europe, EU, Insurance, Climate Change Risk, Non-Life Underwriting, Sustainable Finance, Solvency II, Protection Gap, ESG, EIOPA
Featured Experts

Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist

Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.

Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Previous Article
EC Welcomes Agreement on Changes to Securitization Rules in EURelated Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BaFin Consults on Resolvability Requirements for Resolution Planning
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
EBA Consults on Certain Standards and Guidelines Under CRR and BRRD
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
OJK Publishes Regulatory Updates for Financial Sector Entities
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
EU Publishes Rules on DLT and Data Governance
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
EBA Publishes Phase 2 of Reporting Framework 3.2
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications