PwC is advising a pilot group of the United Nations Environment Programme Finance Initiative (UNEP FI) Principles for Insurance (PSI) on developing methods and piloting a climate risk assessment approach. This pilot group consists of 22 world-leading insurance companies and aims with the project to develop
an industry-wide approach to climate risks and opportunities. The insurance industry should thus gain a better understanding of the effects of climate change on its business and develop strategies for dealing with this issue methodically.
Your expert for questions
Partner, Climate Leader at PwC Germany
The main objective is to enable the pilot group to develop an understanding of future-oriented scenario analyses and to understand possible mechanisms of impact on their business. The project thus contributes to the development of a harmonised approach to the implementation of the TCFD recommendations by (re)insurers. This should serve as an example and guide for the industry. The methodological guidelines, which will be developed during the project, will be published in the form of a final report after the end of the project.
The approach that the pilot group is developing in the course of the project is intended to enable companies in the sector to gain a better understanding of different, future-oriented climate scenarios. Insurers should better understand the possible consequences of certain mechanisms on their business and gain insights into the financial materiality of potential risks and opportunities for their business on the basis of concrete case studies.
The approach covers various climate-related risks - physical risks, transitory risks and litigation risks - and is based on the TCFD recommendations for scenario analysis. The focus is on the development of a uniform method.
PwC is supporting the pilot group by providing advice on developing the analytical tools to test innovative approaches to climate risk analysis. The tools and indicators developed in the course of the project are based on the scenario analysis method to determine the climate-related risks and opportunities for insurance underwriting portfolios.
"This innovative project brings together more than 20 of the world's leading insurers and reinsurers at one table – and will thus have a decisive influence on the way the industry thinks and acts and on how climate risks are dealt with."
Dr Nicole Röttmer
Partner, Climate Leader, PwC Germany