The Geneva Association, an insurance industry think tank, has set up a new task force consisting of experts from 17 of the largest P&C and life insurance businesses globally to manage climate risk.

Insurers represented on the task force are Achmea, Aegon, AIG, Allianz, Aviva, AXA, Chubb, Daichi Life, Hannover Re, Intact Financial, Manulife, MetLife, Munich Re, Prudential Financial, SCOR, Swiss Re, and Tokio Marine.

The task force will work to aid the development of climate risk assessment methodologies and tools for the sector.

It will work alongside regulators, supervisors, rating agencies and the scientific community to identify the most suitable approaches to handle the risk posed by climate change.

Geneva Association managing director Jad Ariss said: “In 2020 alone, the world witnessed massive wildfires in California and Australia, historic floods in China and a record hurricane season in the Atlantic.

“The societal impacts of climate change have become ubiquitous, and individuals and institutions must fully commit now to confronting the climate crisis.”

The task force has also unveiled a new report, “Climate Risk Assessment for the Insurance Industry”, which reveals that climate change poses for P&C and life re/insurers varied levels of physical and transition risks to both sides of the balance sheet, liabilities and assets.

It said that climate risk assessment calls for qualitative and quantitative approaches over short- and long-term time horizons and that knowledge exchange across companies and with other stakeholders is vital to increasing awareness of climate risk.

In recent years, various insurance players have shifted their focus to climate risk.

Notably, in November 2020, Willis Towers Watson bought UK-based climate change adaptation advisory and analytics services provider Acclimatise.

Last September, a group of companies in the US urged the insurance industry to stop offering coverage to fossil fuel companies, which are key contributors to climate change.

In the same month, Swiss Re accelerated its transition towards a low-carbon economy with the introduction of triple-digit internal carbon levy on its direct and indirect operational emissions.

Geneva Association director of climate change and emerging environmental topics Maryam Golnaraghi said: “Building on lessons learned from previous pilots and initiatives, our task force is focused on advancing climate risk assessment and scenario analysis anchored in companies’ decision-making, in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).”