Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • Sections
  • News

'Striking' lack of reference to climate regulations made in Solvency II reporting

Open-access content Friday 6th August 2021
'Striking' lack of reference to climate regulations made in Solvency II reporting

Just a fraction of UK non-life insurers have referenced the Taskforce on Climate-related Financial Disclosures (TCFD) in their Solvency II reporting, analysis by Lane Clark & Peacock (LCP) has found.

LCP’s annual analysis of Solvency II reporting from the top 100 UK and Ireland non-life insurers found that just 6% referenced the TCFD, despite government plans for disclosures to become mandatory in the coming months.

While it isn’t a requirement to report specifically on climate change issues in Solvency II reporting, the researchers said that the low number of firms referencing the new regulations is “striking”.

Although 60% did discuss climate change as a wider issue, this was only a modest increase on the 48% seen last year, despite climate change regulations being imminent. 

This comes after the Prudential Regulation Authority (PRA) wrote to insurers in 2020 advising them to have fully embedded their approaches to managing climate-related financial risks by the end of this year.

“The PRA expects firms to have fully embedded their approaches to managing climate risk across governance, risk management, scenario analysis and disclosure requirements by the end of the year,” said Cat Drummond, partner at LCP.

“Firms who address this quickly will be in line with the direction of policy travel, as well as better prepared to manage climate risks that may already be starting to crystallise.”

The analysis also shows that insurers continue to be well capitalised in the wake of COVID-19, with eligible own funds ratios averaging 208%.

Several firms have relied on capital support to improve solvency as they looked to their parents and shareholders to maintain financial strength during the pandemic.

The proportion of firms holding ancillary own funds has doubled over the last two years from 5% to 10%, while total aggregate investments and cash increased from £184bn to £194bn during 2020.

Moreover, the percentage of firms considering cyber risk as a key threat has increased from 49% to 63% over the last year. In contrast, the proportion of insurers considering Brexit as a key risk continues to fall, and is now only 30%, compared to 42% last year. 

“On the whole, the insurance industry has weathered the immediate fallout from the pandemic,” Drummond continued. “The industry now needs to make sure it isn’t behind the curve when it comes to climate risks.

“While the pandemic and cyber risk have rightly been key considerations over the past year, the scope of the new regulations on climate change means that insurers will need to quickly re-prioritise their action plans to ensure they are ready for when the new requirements go live.”

Image Credit | Shutterstock
Author: Chris Seekings

You may also be interested in...

UK pension schemes aiming for minimal compliance with climate regulations

UK pension schemes aiming for minimal compliance with climate regulations

More than a quarter of defined benefit (DB) pension schemes in the UK are aiming for minimal compliance with climate change regulations, research by Lane Clark & Peacock (LCP) has uncovered.
Wednesday 18th August 2021
Open-access content
Eight in 10 asset managers adopt ESG programme

Eight in 10 asset managers adopt ESG programme

More than eight in 10 UK asset managers have adopted an environmental, social and governance (ESG) programme amid growing regulatory pressure and investor demand, new research has found.
Tuesday 20th July 2021
Open-access content
Insurance firms unprepared for new FCA product governance rules

Insurance firms unprepared for new FCA product governance rules

The Financial Conduct Authority (FCA) has found that many insurance firms could be unprepared to meet its new enhanced rules on product governance.
Wednesday 25th August 2021
Open-access content
TPR scraps limit on unregulated investments in its new code of practice

TPR scraps limit on unregulated investments in its new code of practice

The Pensions Regulator (TPR) has scrapped plans for a limit on unregulated investments in its new code of practice following a 10-week consultation.
Wednesday 25th August 2021
Open-access content
UN report warns of 'unprecedented' and 'irreversible' climate change

UN report warns of 'unprecedented' and 'irreversible' climate change

Man-made global warming has caused “unprecedented” changes to the climate, some of which are “irreversible” for thousands of years, a damning new UN report has claimed.
Tuesday 10th August 2021
Open-access content
Improving air quality found to reduce dementia risk

Improving air quality found to reduce dementia risk

Improving air quality may boost cognitive function and reduce dementia risk, according to multiple studies unveiled at the Alzheimer’s Association International Conference 2021 yesterday.
Tuesday 27th July 2021
Open-access content
Filed in
News
Topics
Environment
Regulation Standards
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Reserving Analyst

London (City of)
Negotiable
Reference
149485

Senior GI Modeler - Capital and Planning

London (Central)
£ excellent
Reference
149436

Risk Oversight Manager

Flexible / hybrid with a minimum of 2 days per week office-based
£ excellent
Reference
149435
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ