Gimar special topic edition the impact of climate change on the financial stability of the insurance sector

1.2 SCOPE AND CONTEXT
The scope of the analysis is how insurers’ 
investments may be negatively affected by 
physical and/or transition risks. It thereby focuses 
on the insurers’ assets. The analysis does not 
assess the potential impact of climate change 
on insurer liabilities (underwriting), although their 
relevance is briefly described in a qualitative 
manner in Section 2. It also does not assess 
insurers’ exposures to assets that are deemed to 
contribute to a sustainable transition (sometimes 
called “green” investments).
The report builds on existing IAIS work on 
climate risk. In early 2017, the IAIS published 
a qualitative analysis of the impact of climate 
change on insurance as part of its 2016 GIMAR. 
In mid-2018, the IAIS and the Sustainable 
Insurance Forum (SIF) published Issues Paper on 
Climate Change Risks to the Insurance Sector.
As the first analysis of climate change risk by an 
international standard setting body, this paper 
provided an overview of how climate change 
affects the insurance sector and its relevance 
for insurance supervision. Since then, the IAIS 
and SIF also published an Issues Paper on 
disclosures and, most recently, an Application 
Paper providing guidance to supervisors on 
embedding climate-related risks into the day-to-
day supervision. See also section 5. This GIMAR 
special edition complements existing IAIS work 
by presenting a quantitative analysis based on 
unique supervisory information provided by IAIS 
Members, including quantitative information and 
supervisory assessments of the risks.
5
The report draws on, and complements, existing 
work by other international organisations as well 
as by IAIS Members. In recent years, several 
international organisations have highlighted the 
importance of climate change for central banks 
and supervisors, including the need for coordinated 
action to better assess and respond to climate-
related risks. This includes publications by the Bank 
for International Settlements (BIS, 2020), the FSB 
and the Network of Central Banks and Supervisors 
for Greening the Financial System (NGFS). In 
addition, several IAIS Members have undertaken, 
or are undertaking, analyses similar to this report. 
However, these analyses focus largely on assessing 
risks within their own jurisdictions. The IAIS’ 
analysis leverages the experience from Members’ 
existing efforts and complements it by providing a 
cross-jurisdictional picture for the first time.