Discussion Paper - Disclosure of Climate Change Risks for Commercial Insurers - December 2023

Summary

This is a Bermuda Monetary Authority (BMA) Discussion Paper (not yet a rule) seeking industry feedback on a proposed framework for climate-related financial disclosures by commercial insurers and insurance groups. It builds on the BMA's updated Insurance Code of Conduct and its March 2023 Climate Risk Guidance Note, and proposes aligning disclosure expectations initially with the Task Force on Climate-Related Financial Disclosures (TCFD) framework, with possible later alignment to ISSB standards.

• Scope: Proposed to apply to all commercial insurers (Classes 3A, 3B, 4, C, D and E) and insurance groups regulated by the BMA.
• Disclosure pillars: Framework organised around the four TCFD pillars: governance, strategy, risk management, and metrics and targets.
• Metrics: Proposes core investment metrics (e.g. Scope 1, 2 and 3 GHG emissions, carbon footprint, weighted average carbon intensity) and core underwriting metrics, plus expectations for transition plans.
• Proposed phased timeline: Groups would report first for financial reporting periods starting year-end 2024; Class 4 and Class E commercial insurers from year-end 2025; all other commercial insurers (Classes 3A, 3B, C and D) from year-end 2026 (subject to feedback).
• Proportionality: Level of detail expected to reflect each insurer's size, complexity and risk profile.

As a discussion paper, none of these proposals are yet binding; the BMA is inviting industry comments (including on scope, thresholds, timing and implementation obstacles) via a required Excel response form, before finalising the approach in a subsequent consultation paper.

Key obligations

• Interested parties wishing to comment must submit responses using the Appendix C Excel response form to climaterisk@bma.bm before 15 February 2024, with the company name and 'Discussion Paper - Disclosure of Climate Change' in the email subject line.
• Under the proposals discussed (not yet finalised), insurers and groups would be expected, once implemented, to publish annual climate-related financial disclosures aligned with the TCFD's four pillars and to disclose an explicit statement (with supporting rationale) if they conclude climate is not a material risk to them.

Applies to

commercial insurers (Classes 3A, 3B, 4, C, D and E), insurance groups

Deadlines

• 15 February 2024: Extended deadline for industry responses and comments on the Discussion Paper, to be submitted via the Appendix C Excel form to climaterisk@bma.bm.
• year-end 2024 (proposed): Proposed start of first climate disclosure reporting period for insurance Groups, pending feedback.
• year-end 2025 (proposed): Proposed start of first climate disclosure reporting period for Class 4 and Class E commercial insurers, pending feedback.
• year-end 2026 (proposed): Proposed start of first climate disclosure reporting period for remaining commercial insurers (Classes 3A, 3B, C and D), pending feedback.