Information Note 23/2 published on 24 January 2023, follows up Information Note 22/9 published by the CAA in August 2022 to raise awareness of the challenges relating to existing and forthcoming regulatory texts governing sustainability in the insurance sector.
Information Note 23/2 aims to provide market actors with an analysis of how climate change risk is taken into account in the ORSA reports submitted to the CAA between 2019 to 2021, highlighting the efforts that have been undertaken so far and those that still need to be made.
2. Key findings
The CAA notes a growing awareness of climate change risks across the sector in general, indicating that the topic is often addressed in the sections of the ORSA report relating to governance and risk management.
The CAA considers, however, that there is still room for improvement, particularly with respect to the climate change risk scenarios specific to each undertaking and the integration of sustainability aspects into the evaluation of their overall solvency needs.
The CAA expects to see a more in-depth approach to the integration of climate change risks in the upcoming ORSA reports, In particular, the ORSA must include specific stress tests, requiring prospective long-term assessments that may necessitate adaptations of actuarial projection models and technical expertise, which undertakings are asked to prepare for.
Complying with and adapting to the ever-evolving ESG framework is a constant challenge – contact our experts to help you to meet this challenge and stay ahead of the game.
Read Information Note 23/2 (French only) here_
Read EIOPA opinion on the supervision of the use of climate change scenarios in ORSA here_
Read EIOPA Consultation Paper on application guidance on running climate change materiality assessment and using climate change scenarios in ORSA here_
Read EIOPA Application Guidance on climate change materiality assessments and climate change scenarios in ORSA here_
Read our newsflash on Information Note 22/9 here_
Access our timeline on key ESG milestones in the banking and insurance sectors here_