Guidance Notes: Climate-Related Governance and Risk Practices and Disclosures for Insurers

The Prudential Authority (PA) has issued final Guidance Notes (GNs) on climate-related governance, risk practices, and disclosures for insurers, following their 2023 draft guidance. Accompanying these GNs are a Feedback Note on public consultations, a Climate Risk Practices Observation Report, and the PA Climate Roadmap for 2024-2026.

Deloitte has thoroughly analysed these documents in our latest paper, which builds on our initial publication from August 2023. This edition details the enhancements to the draft GNs, addresses industry challenges, and highlights updates in governance, strategy, risk management, scenario analysis, stress testing, and metrics.

The paper aims to guide the insurance industry in advancing climate risk management and disclosures, helping institutions build resilience and meet regulatory expectations.

The revised GNs incorporate more explicit guidance on aligning scenario analysis and stress testing with risk management frameworks and decision making processes. They include the necessity for contingency plans and emphasise supervisory review. The enhancements make the final guidance note more comprehensive and actionable for insurers to manage and disclose climate-related risks through the ORSA process.