Incorporating sustainability risks in insurance regulation to stimulate greener business practices
FERMA is continuing its work this year to support and promote the risk manager in ensuring the sustainability of European organisations. Most recently, FERMA has highlighted the importance for risk management of the proposed inclusion of sustainability risks in EU insurance regulations.
FERMA’s comments come in response to the consultation on a technical paper by the European Insurance Authority (EIOPA). FERMA is a member of the EIOPA Insurance & Reinsurance Stakeholder group. In its submission:
FERMA welcomes the future inclusion of sustainability risks in the insurance prudential regulations, including Solvency II and the Insurance Distribution Direction (IDD).
It emphasises that new measures should take account of the size and sophistication of the insurance organisations, as other insurance regulation already does.
It says that many businesses are still in the process of developing sustainable practices and they need to invest in skills for managing sustainability risks.
“We will need time to see how the ‘inclusion of sustainability risks’ in insurance regulations will work in practice and the practical implications in terms of the coverage provided by European insurers,” says FERMA CEO Typhaine Beaupérin who represents FERMA on the stakeholder group.
Incorporating sustainability risks in insurance regulation is part of the EU’s drive to use financial institutions to stimulate greener business practices. In May 2018, the Commission published a programme intended to implement the final report of the EU High-Level Expert Group on Sustainable Finance, which FERMA welcomed.
FERMA has consistently stressed the value of professional risk management in creating an overview of sustainability issues and mitigating risks. It made sustainability and responsible business practice key topics for its European Risk Management Seminar in Antwerp in October, and afterwards published a sustainability report, which details lessons from the seminar sessions. There will be a plenary session on sustainability at the FERMA Forum from 17 to 20 November at the FERMA Forum in Berlin.
“We believe this is a topic on which risk managers can make an important contribution to their organisations and at European level,” said Typhaine.