Non-Life Insurance: Underwriting of Climate-Related Perils

Substantial Contribution to Climate Change Adaptation

The insurance activity must underwrite policies covering climate-related perils including flood, storm, wildfire, hail, drought, and subsidence driven by climate change. The insurer must demonstrate that its underwriting approach contributes to climate adaptation through at least two of the following mechanisms.

First, the insurer must integrate forward-looking climate risk models that use climate projections consistent with IPCC scenarios (including RCP 4.5 and RCP 8.5) into its pricing and risk assessment. Traditional backward-looking actuarial models alone are insufficient; the risk assessment must account for non-stationary climate trends.

Second, the insurer must offer premium incentives, risk reduction services, or loss prevention guidance that encourage policyholders to implement physical adaptation measures (e.g. flood barriers, fire-resistant materials, drought-resilient landscaping, improved drainage systems). The effectiveness of these incentives must be tracked and reported.

Third, the insurer must contribute to climate risk data sharing and public risk awareness by participating in national or EU-level climate risk databases, publishing risk maps, or partnering with public authorities on adaptation planning. The insurer must report annually on the share of its portfolio exposed to climate-related perils, loss trends, and adaptation measures promoted to clients.