On 3 August, the Central Bank of Ireland (CBI) published a public consultation on proposals to introduce guidance on climate change risks for the (re)insurance sector.

With the publication of the guidance, the CBI used the opportunity to reiterate that strengthening the resilience of the financial system to climate-related risks is one of its key priorities and that climate change is no longer an emerging risk.

The proposed Guidance outlines the Central Bank’s expectations on how (re)insurers address climate change risks in their business and aims to assist them in developing their governance and risk management frameworks to do this.

Insurance Ireland submitted a formal response to the consultation paper and welcomed the opportunity to engage with financial industry’s stakeholders in addressing sustainability and climate-related challenges.

We further acknowledged the urgency to take action to assess and mitigate climate change risks, the importance for the financial system/institutions to be resilient to those risks, and the economic, social and environmental implications of failing to timely address and manage climate-related risks.

The II submission has also highlighted some challenges arising from the proposed guidance around the envisioned time horizons, the definition of materiality assessments, the lack of reliable data and the process of quantifying double materiality.

Our response concluded with the acknowledgement of the challenge to strike the right balance between flexibility of what firms are expected to deliver in terms of assessing, managing and mitigating climate change risk and the avoidance of a too prescriptive regulatory approach and called to the CBI for a stronger and on-going stakeholder engagement on important for the industry matters as the Climate Change Risk Guidance.