Insurance Firms Lag in Climate Committees

According to Fathom’s latest report, only nearly a third of insurance firms have dedicated climate risk committees, in contrast to 63% of banks and 31% of investment firms. The report, “The Climate Challenge for Boards: Perspectives from the Financial Sector”, shows diverse ways in which financial and insurance firms manage climate risk at the board level, along with differences in prioritization and committee structures. For those with climate risk committees, insurance firms are most likely to ensure independence, as 80% of their committees operate separately from the board, compared to 73% of banks and 72% of investment management firms.

Insurance firms, which usually focus on short – term risks, now consider climate risk central, with 70% deeming it a priority. This is just below investment management firms at 72% and well ahead of banks at 50%. However, only 43% of insurance firms use external expertise for climate risk assessments, versus 56% in investment management and 17% in banking. Harry Vardigans, head of Insurance at Fathom, said this research highlights an opportunity for the insurance sector to improve climate risk management by establishing committees and enhancing data resources.

The study, commissioned by Fathom and conducted by IFI Global, examines board oversight of physical climate risk among 92 corporations, including 30 insurance firms, 30 banks, and 32 investment firms. The report’s findings are based on annual and ESG reports and interviews with 42 senior leaders in these sectors.

Related topics:

• Prudential’s APE Sales Rise 7% to $5b in First 9 Months of 2024
• Swiss Re to Sell iptiQ’s European P&C Business to Allianz Direct
• Hang Seng Insurance Set to Benefit from Parent Company Ties