Report
In its response to the IAIS public consultation on climate scenario analysis in the insurance sector, Finance Watch called for economic models that do not mislead and climate scenario analyses that prepare the market.
The IAIS published a public consultation on a draft application paper for insurance supervisors on the potential use of climate scenario analysis in the insurance sector, to which Finance Watch replied.
The consultation focused on how insurance supervisors and insurers might use climate scenario analysis to better understand the micro and macro level climate risks they are exposed to.
In its response, Finance Watch welcomes the IAIS work to better understand climate risks for insurers, but warns that climate scenario analysis can only be a useful tool if suitable economic models and realistic assumptions are identified and used.
Scenario analyses should provide a realistic assessment of climate change-related economic impacts and be combined with an adequate time-horizon and quantification of the stranded fossil fuel assets borne by investment portfolios to be effective tools for assessing climate-related risks.
