In a speech given to the Economist’s Insurance Summit 2015, Paul Fisher, Deputy Head of the Prudential Regulation Authority (PRA) and Executive Director of Insurance Supervision, warned insurers of their exposure to changes in public policy on environmental issues.
Risks emerging from climate change such as growing catastrophe exposures do not only have an impact on insurers’ claims experience but can also result in risk to their investment strategies. Paul Fisher gave the example of insurers investing in assets that could be left stranded by policy changes which limit the use of fossil fuels. Insurers, he suggested should be alert to the developing policy change towards alternative energy sources.
According to Paul Fisher, the Bank of England has accepted an invitation from the Department for Environment, Food and Rural Affairs to compile a Climate Change Adaptation Report which is due for delivery later in 2015. The report will consider the concerns about ‘stranded assets’ – those fossil fuel resources not burned in order to limit global temperature increase.
Clearly, the PRA is alive to concerns that insurers need to adapt their investment strategies to meet significant changes in public policy.
Paul Fisher will be replaced by Sam Woods as Executive Director of Insurance Supervision at the PRA at Easter.
For further information: Outgoing head of insurance at PRA warns insurers to be conscious of changing environmental policy, 3 March 2015