European Insurance and Occupational Pensions Authority finds progress but uneven approaches in insurers’ climate risk integration in ORSA

The European Insurance and Occupational Pensions Authority (EIOPA) has published a public statement summarising a monitoring exercise on how European (re)insurers are integrating climate change-related risks into their Own Risk and Solvency Assessment (ORSA). The exercise finds that most insurers covered now include climate change risk assessments in their ORSAs and that integration into risk management frameworks has improved, while highlighting persistent challenges and cross-country differences. Within scope, insurers are increasingly assessing both physical and transition risks and making greater use of scenario analysis to evaluate potential financial impacts. In more cases, climate change assessments are being linked to defined management actions and incorporated into strategic decision-making. EIOPA also identifies significant variation in approaches across jurisdictions, limited availability of high-quality, reliable and granular data, and difficulties in extending analysis time horizons beyond those typically used in ORSA. Supervisory practices are described as evolving and uneven in maturity across member states, with many national supervisors strengthening methodologies and capacity. EIOPA signals that it will continue activities to support supervisory convergence and capacity building, building on its 2021 Opinion and related application guidance on climate change risk scenarios in ORSA.