finance & economy

Insurers Well-Equipped to Cope With Climate Change Challenge

February 24, 2021

TAP)- Climate change, and its impact on natural catastrophe (nat cat) losses, is one of the most important ESG (environmental, social, governance) risks for non-life and composite insurers and for reinsurers, Fitch Ratings says in a new report released on February 22.

Although climate change poses a serious challenge to the (re)insurance industry, the industry has various tools at hand to manage this risk effectively. Fitch therefore believes climate change has a minimal impact on the ratings of most of the insurers in its portfolio. This outcome is reflected in a standard ESG relevance score of ‘3' (‘minimal relevance') that Fitch has assigned for the Exposure to Environmental Impacts factor for non-life and composite insurers and reinsurers.

The special report ‘Insurers Well-Equipped to Cope with Climate Change Challenge' provides insight into how climate change affects the credit profile of the insurance sector. It first examines how Fitch incorporates climate change into its credit analysis, and then explains how the insurance industry and its regulators deal with climate change within risk management, including the modelling of capital requirements.

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