A second climate stress test to come for French insurers

The French banking and insurance supervisor confirmed on Wednesday, on the sidelines of the presentation of its annual report, the forthcoming holding of a second stress test for French insurers in the face of climate risk.

These stress tests aim to assess the robustness of the sector in the face of the transitions necessary for a carbon neutral world by 2050, considering several scenarios.

The Prudential Control and Resolution Authority (ACPR) will conduct a new climate stress test exercise for insurance in 2023/2024, as announced at the end of the first exercise, in May 2021, said Jean-Paul Faugres , its vice-president.

For him, insurers must better take climate risk into account and step up their efforts as major institutional investors to modify their investment policies and prevent transition risks.

At the scale of the profession, the burden of natural disasters, more frequent and more severe with global warming, exceeded 10 billion euros in France last year, according to the professional federation France Assureurs, a record since 1999.

This stress test will be done on a voluntary basis. The supervising body expects more participants than in the first exercise (22 in total).

He will add a short-term scenario in addition to the two long-term scenarios already presented during the first exercise.

This announcement comes a few days after the global alliance of insurers, the NZIA, which coordinates the policies put in place by its members to fight against global warming, suffered major defections from its ranks.

Heavyweights like Axa, Allianz or the reinsurer Scor announced their departure last Thursday a few hours apart, without specifying the reason but in a context of the risk of impeding free competition raised in the United States.

On the same theme, but on the side of the banks, the Governor of the Banque de France Franois Villeroy de Galhau, also present on Wednesday, recalled the major advances in terms of transparency and publication standards while specifying that the stress tests ddis had shown that preparation for physical and transition risks could still be improved.

These interventions were held on the sidelines of the publication of the annual report of the ACPR, backed by the Banque de France and in charge of monitoring the activity of banks and insurance companies.

source site-96