DNB published the November 2019 issue of insurance newsletter. This issue contains an updated calendar for insurers and announces the publication of good practices on the treatment of climate-related risks under the Own Risk and Solvency Assessment (ORSA). DNB has also answered a question on whether it expects Dutch insurers to take climate-related risks into account.
The European Solvency II supervisory framework requires, in Article 262 of the Solvency II Delegated Regulation, that the ORSA of an insurer should be forward-looking and include the following: "the risks to which the company is exposed or could be exposed taking into account potential future changes in its risk profile that result from the company or from the economic and financial environment, including operational risks.' The framework also provides in guideline 5 that "the company must substantiate and document every ORSA, and the results thereof, with supporting documents." Given the potential impact of climate-related risks on both the asset side of the balance sheet and the technical provisions, DNB expects insurers to include climate-related risks in their ORSA by analyzing and describing the impact of these risks on their risk profile. DNB expects a presentation and explanation of the results of this analysis in the ORSA report. If the analysis shows that climate-related risks are not considered material—for example because the insurer is not or could not be exposed to these risks—DNB expects to see this reflected in the explanation.
The document on good practices discusses the relevant legislation and regulations. It explains which important climate-related risks can affect insurers, both in terms of physical and transition risks. Subsequently, in the form of good practices, starting points are given for the processing of (both cross-sectoral and branch-specific) climate-related risks in ORSA.
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Keywords: Europe, Netherlands, Insurance, Newsletter, QIS Calendar, Solvency II, ORSA, Q&A, Climate Related Risks, DNB
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