Earlier this year, the PRA published PS11/19 and SS319 on ‘Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change’.
Following on from this, they have now published a ‘Framework for assessing financial impacts of physical climate change‘. This framework is aimed at the general insurance sector. It was developed by an industry-wide working group to provide practical assistance to those needing to assess financial risks from physical climate change. It is intended to serve as a starting point for firms’ own assessment of these risks on their liabilities, and the consequent potential impact on specific business decisions.
The framework is set out in six stages, ranging from identifying the business decision, assessing available catastrophe tools for analysis, to reporting and actioning the outputs.