GFIA Global Federation of Insurance Associations

The Global Federation of Insurance Associations (GFIA) has responded to a consultation by the International Association of Insurance Supervisors (IAIS) on its draft Application Paper on public disclosure and supervisory reporting of climate risk.

In its response, GFIA notes that it appreciates the IAIS’s focus on limiting public disclosure to what is material and relevant, and avoiding unnecessary disclosure and taking the cost/benefit into consideration.

However, GFIA is concerned that the draft paper does not clearly state that materiality should be determined by insurers, as is the case for other disclosure topics. The IAIS suggests supervisors increase data collection and framework standardisation, but that would likely require insurers submitting sets of data that may not actually be material to all insurers.

Material risks deemed immaterial due to adaptation should not be part of mandatory disclosures and GFIA invites the IAIS to clarify this point. In addition to recognising the challenges, it would be valuable if the paper could also offer tools and solutions on how these burdens can be mitigated.

Furthermore, GFIA notes that several of the IAIS's suggestions are already being implemented by certain supervisory authorities.

GFIA also responded to a IAIS consultation on draft supporting material on macroprudential and group supervisory issues and climate risk. GFIA agrees that potential financial stability implications of climate-related risks should be an integral part of macroprudential monitoring and agrees it is important for macroprudential supervisors to be aware of climate risks and their potential impacts.

However, it points out that insurers are primarily mitigators of systemic risk rather than generators or transmitters of systemic risk and suggests supervisors to take this into consideration.

Additionally, it is noted that many of the IAIS's recommendations and examples of good practice are already in place in many jurisdictions around the world.

Finally, GFIA also stresses the importance of ensuring that supervisory action is proportional and risk-oriented to avoid unnecessary burdens on insurers and considering that supervisors already have strong principles regarding systemic risks in place, climate risks should be integrated within this existing oversight framework.