Notice - Consultation Paper - Guidance Note: Management of Climate Risk for Commercial Insurers (2022-09-12)

Summary

This is a BMA consultation notice announcing a draft Guidance Note on Management of Climate Risk for Commercial Insurers. It sets out the Authority's expectations for how insurers should address climate risk within governance and risk management practices under the revised Insurance Code of Conduct, and invites public comment before finalisation.

• Scope of guidance: Focuses on corporate and board governance and risk management practices, including Own Risk and Solvency Assessment (ORSA) and climate risk scenario analysis.
• Implementation phase: The Authority expects an implementation period of up to three years, with insurers demonstrating continuous progress documented annually in their ORSA.
• Proportionality: Expectations are based on a proportionality principle, recognising diversity in the insurance market and the evolving nature of climate risk measurement methods.
• Monitoring: The BMA will monitor progress through supervisory activities, including off-site data analysis and on-site visits.
• Consultation process: Comments on the proposed guidance note are invited from the insurance industry and other interested persons, to be sent to RiskAnalytics@bma.bm with the subject heading Climate Risk.

As a consultation paper, this document does not yet impose binding requirements; it signals forthcoming supervisory expectations for commercial insurers once the guidance note is finalised.

Key obligations

• Insurers should document continuous progress on climate risk management in their annual ORSA once the guidance takes effect
• Interested parties wishing to comment must submit responses to RiskAnalytics@bma.bm with the subject heading 'Climate Risk' by the consultation deadline

Applies to

commercial insurers

Deadlines

• Monday, 31 October 2022: Deadline for the insurance industry and other interested persons to submit comments on the draft Guidance Note