Insurance Climate Change and The Law


Page 98

Climate-related disclosures

There is a growing demand for climate-related information about enterprises, their products, and value chains.1 Insurers need information and data on climate change risks and their financial impacts for their underwriting processes and investment decisions to support robust risk assessments and valuations. Insurers also need this information to be able to assess climate change risk and their exposures to climate-related losses for the purposes of their regulatory risk management processes, including the impact on their regulatory capital requirements and the value of their investments. In addition, insurers are facing public demand, as well as an increasing number of legal and regulatory requirements, for disclosing information on their inward and outward impacts and their risk governance and management practices in relation to those impacts. Bowman and Wiseman explain the logic of climate-related disclosures at three levels: (1) at the macro-economic level, such disclosures allow the markets to price in climate change risk; (2) at the meso-market level, investors can use the disclosed information to inform their investment and divestment decisions; and (3) at the micro individual company level, the relevant information helps companies to identify and manage climate change risk.2

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