APRA Survey Reveals Impact of Climate Change on Insurance Industry Practices
APRA Survey Reveals Impact of Climate Change on Insurance Industry Practices
The APRA report indicates that climate impacts will be prominently felt in pricing uncertainties and policy exclusions. This sheds light on how climate change continues to shape the insurance landscape, as extreme weather events become increasingly significant risks for the home insurance sector.
The survey conducted in April included 149 participants from APRA-regulated sectors such as general insurers, life and health insurers, banks, and superannuation trustees. These inputs underscore a growing understanding of how climate risks intersect with insurance businesses.
Interestingly, while the majority of large companies have shown progress in their "climate risk maturity" since the previous 2022 survey, there remains a portion—about 25%—whose maturity scores have decreased. This suggests a divergent approach to addressing climate risks across the industry.
APRA sees the need to prioritize climate risk within its broader regulatory and supervisory role. As per Suzanne Smith of APRA, "Stakeholder expectations are rising, and APRA is committed to ensuring that the institutions it regulates take a strategic and risk-based approach to managing climate-related risks in a proportionate manner.”
This commitment by APRA marks a critical shift in regulatory focus, as they aim to ensure that financial entities adequately recognize and integrate climate-related risks into their strategic frameworks.
The original survey report highlighted expectations aligned with the regulatory body’s perspectives. Acts and measures by insurers suggest an acknowledgment of climate-driven event risks, pushing the industry towards more resilient underwriting strategies and risk assessments.
The findings, as presented by APRA, draw attention to the urgent need for insurers to evolve their strategic approaches in the face of rising climate change challenges: ensuring pricing models and risk evaluations are adequately forward-looking and resilient.
To these ends, the insurance industry is expected to innovate, incorporating new technologies and data analytics to improve their prediction models and coverage plans, addressing both current and future climate risks.
While APRA’s survey confirms that climate risk presents a formidable challenge to traditional insurance norms, it also opens a new frontier for insurers to enhance their market strategies and client relations through sustainability-focused frameworks and adaptive risk management practices.
Published:Tuesday, 19th Nov 2024
Source: Paige Estritori
Share this news item:
| Insurers Face Intense Scrutiny Over Quake Claim Rejections 21 Nov 2024: Paige Estritori In recent months, Muswellbrook, a town in New South Wales, has experienced a series of earthquakes that have left residents grappling with both physical destruction and emotional distress. Criticism is mounting against insurers as more than 600 claims have emerged, following these seismic events, yet many remain unresolved or denied. - read more |
| AI Regulations: A Web of Complications 20 Nov 2024: Paige Estritori The Insurance Council of Australia (ICA) has raised concerns about the potential fallout from a fragmented regulatory approach to artificial intelligence and automated decision-making in the industry. There is fear that this patchwork of reforms could result in conflicting requirements, heavier compliance burdens, and increased industry confusion. - read more |
| APRA Survey Reveals Impact of Climate Change on Insurance Industry Practices 19 Nov 2024: Paige Estritori A recent analysis by the Australian Prudential Regulation Authority (APRA) reveals that over 90% of general insurers and reinsurers anticipate climate change will influence their underwriting procedures, posing new challenges to the industry. - read more |
| Fraudulent Claims Lead to Complete Denial of Compensation 18 Nov 2024: Paige Estritori In a remarkable case highlighting the severe consequences of insurance fraud, an individual's attempt to inflate a theft insurance claim has resulted in the total denial of compensation. Despite a significant portion of the claim being genuine, fraudulent actions negated any potential payout. - read more |
| Why Every Australian Entrepreneur Needs Income Protection Insurance Entrepreneurship in Australia - a landscape overview: The allure of entrepreneurship in Australia is undeniable, with the promise of innovation, personal autonomy, and potentially limitless earnings. However, the path of an entrepreneur is often unpaved and unpredictable. Without the safety nets traditionally provided by corporate employment, Australian entrepreneurs must proactively safeguard their personal finances against the capricious winds of business fortune. - read more
|
| The Essential Guide to Travel Insurance for Australian Travelers Planning a trip is always an exciting experience, but it’s essential to be prepared for unexpected events. This is where travel insurance comes in. For Australian travelers, having the right travel insurance can make all the difference, offering peace of mind and financial protection. - read more
|
| Decoding Disability: How Your Policy's Definition Affects Your Security In the quest for economic stability and peace of mind, income security stands as a critical foundation. The assurance that one can rely on a stable financial inflow, regardless of life's unpredictabilities, is what keeps many individuals focused on their present while confidently planning for their future. However, the seldom-discussed intricacies of disability definitions within insurance policies can significantly influence this security. - read more
|
| The Savvy Consumer’s Guide to Purchasing Life Insurance in Australia As the landscape of finance and personal security evolves in Australia, the importance of being insured has never been more prominent. In a world of changing family dynamics, economic pressures, and higher living costs, life insurance stands as a bastion of support ensuring the well-being of loved ones in the event of unforeseen circumstances. The advent of the digital age has significantly shifted the manner in which Australians can shop for and secure life insurance from the comfort of their homes, offering tailored solutions with just a few clicks. - read more
|
Insurance that an insurance company purchases from another insurance company to mitigate risk.