The Bank of England has launched its latest report, 'A framework for assessing financial impacts of physical climate change: a practitioner’s aide for the General Insurance Sector'
Bank of England (PRA) has acknowledged the importance of climate change and the need for the insurance sector to prepare for forecasted impacts to the economic, physical and human environment.On 22 May, a report that Ambiental Risk Analytics contributed to was published titled, ‘A framework for assessing financial impacts of physical climate change: A practitioner’s aide for the General Insurance Sector’, with a foreword by David Rule, Executive Director of Insurance Supervision at the PRA and sponsor of the working group.
The report is the product of the thinking of a working group with representatives from across the general insurance market convened in July 2018. This report outlines a framework for practitioners to assess financial impacts from physical climate change risk. It aims to be helpful and practical, including detailed use cases to help (re)insurers assess financial impacts on liabilities from climate change risk. Using tools that are already available within the general insurance sector, the report presents a number of case studies that illustrate how the proposed framework can operate in practice. The examples display how consideration of financial impacts from physical climate change risk can better inform insurers’ risk management decisions.
Ambiental is proud to be involved in the co-development of the report. As part of the working group, Ambiental and other leading model vendors and industry experts have assisted with the design of the report to set the scene for the impact of climate change, how the industry should respond and practical case study examples of solutions already available on the market.
“Ambiental is encouraged to see the insurance sector responding to the reality of climate change and its impacts. We developed our suite of tools and models – FloodFutures™ – specifically to assist insurers with longer term strategic thinking, ensuring they have sufficient capital and re-insurance funds available to mitigate potential risks across their entire portfolio.”
George Longfoot, Chief Operating Officer, Ambiental Risk Analytics
We hope the report is an important first step of developing tools, strategies and risk management approaches to climate change risk beyond the usual planning horizon for the general insurance sector. We encourage you to read the report, and we are keen to hear feedback, suggestions and ideas on this topic – please email PCCriskframework@bankofengland.co.uk or to discuss the content of the report and how we can assist with understanding the impact of climate change to your portfolio, please get in touch by completing the form on this page or call us.
Visualised extracts from our FloodFutures™ Climate Change Flood Maps. The images show the impact of pluvial flooding to the sample property portfolio for the different 2050s time epoch scenarios.
Pluvial depths 2050 low emissions
Pluvial depths 2050 medium emissions
Pluvial depths 2050 high emissions
Get in touch
Contact us to find out more about how we contributed to the report and can help you respond to the climate change component of the PRA's GIST stress test by calling +44 (0)203 857 8543 or email Mark.Nunns@ambientalrisk.com