On 10 October 2023, the Commissariat aux Assurances (CAA) released Information Note 23/9 (“Information Note 23/9”) communicating its follow-up on the implementation of climate change risk scenarios in the Own Risk and Solvency Assessment (“ORSA”).
Information Note 23/9 follows up CAA Information Note 23/2, published in January 2023, which provided market actors with an overview of how climate change risk is taken into account in the ORSA reports submitted to the CAA.
Information Note 23/9 gives an overview of the CAA’s monitoring in this area during the first half of 2023 and of the first audit measures, which are currently being undertaken.
2. Key considerations
The CAA notes generally that the 2022 ORSA reports display a significant improvement in how climate risks are considered.
It also observes that the quality of the management of climate change risks has strengthened, notably in relation to undertakings’ governance arrangements, qualitative risk analysis and quantitative cost and solvency assessments.
The CAA concludes that undertakings are making progress when it comes to considering and ensuring good quality management of climate change risks.
However, a minority of direct insurance undertakings and most captives either do not refer to climate change risks in their ORSA, or barely mention them. Information Note 23/9 emphasises that the applicable rules and regulations require undertakings to consider climate change risks, even in cases where these risks are deemed non-material. Accordingly, the CAA will contact certain undertakings individually and continue to monitor and audit adequate compliance with the relevant requirements generally, with a focus on both governance and quantitative aspects (including medium and long-term impacts on technical provisions and solvency ratios).