Impact underwriting: EIOPA reports on insurers’ use of climate-related adaptation measures in non-life underwriting practices

The European Insurance and Occupational Pensions Authority (EIOPA) published a report on insurers’ inclusion of adaptation measures to climate change in their non-life underwriting practices.
The report is the outcome of an impact underwriting pilot project that EIOPA conducted in 2022 with 31 willing insurance companies from 14 different European countries.
The research evaluates how the market currently underwrites policies for adapting to climate change and how those policies will be handled prudentially under Solvency II. It assesses whether any barriers are introduced by the prudential framework that would prevent the widespread application of adaption methods in non-life insurance products.
The paper demonstrates that the EU insurance industry overall looks to be at a rather early stage, even though progress is being made in how insurance enterprises are adapting their non-life underwriting methods to climate change. EIOPA believes there is still potential for improvement, particularly when it comes to standardizing the inclusion of climate adaptation measures in insurance contracts, for example through the use of specific risk-based certifications and initiatives.
EIOPA will keep working on impact underwriting to help overcome some of these difficulties in order to promote climate change adaptation in non-life insurance in the EU. This entails educating the public about the threats posed by climate change and the preventative measures associated with them as well as advocating the use of open-source modeling and data.