Non-life insurance: underwriting of climate-related perils

✓ Climate adaptation

1. Leadership in modelling and pricing of climate risks:1.1. The insurance activity uses state-of-the-art modelling techniques that:properly reflect climate change risks;do not only rely on historical trend;integrate forward-looking scenarios. 1.2. The insurer publicly discloses how the climate change risks are considered in the insurance activity.1.3. With the exception of legal restrictions on contractual conditions and insurance premiums, the insurance activity provides incentives for risk reduction by setting out the (pre)-conditions for the insurance coverage of risk and by acting as a price signal of risk. For the purpose of this point, reduced premiums or deductibles, possibly based on supportive information on existing/possible actions, to policyholders who protect an asset or activity against natural catastrophes damages may be considered an incentive for risk reduction.1.4. After a climate risk event, the insurer provides information on the conditions under which coverage under the insurance activity could be renewed or maintained and in particular the benefits of building better in that context.2. Product design:2.1. Insurance products sold under the insurance activity offer risk-based rewards for preventive actions taken by policyholders.For the purpose of this point, where a policyholder has invested in adaptation measures, lower premiums may be considered as a risk-based reward for preventive actions taken by policyholders.By way of derogation from this point, where legal restrictions on contractual conditions and insurance premiums prevent the insurance or reinsurance company from providing risk-based rewards, insurance products may instead provide to customers measures in relation to an asset, an activity, or people that prevent or protect against natural catastrophes. Such measures may be provided as information or advice to customers on climate risks and preventive measures that customers could take.2.2. The distribution strategy for such products covers measures to ensure that policyholders are informed on the relevance of preventive measures that they could take, for the terms and conditions of the insurance coverage, including any impact of such measures on the insurance coverage or the premium level.3. Innovative insurance coverage solutions:3.1. Insurance products sold under the insurance activity offer coverage for the climate-related perils(710) where the demands and needs of policyholders require so.3.2. Depending on the demands and needs of individual customers, products may include specific risk transfer solutions such as protection against business interruption, contingent business interruption, other non-physical damage-related loss factors, cascading effects and interdependencies of hazards (secondary perils), cascading impacts of interacting natural and technological hazards, critical infrastructure failures.4. Data sharing:4.1. With due regard to Regulation (EU) 2016/679 of the European Parliament and of the Council(711), a significant share of loss data related to insurer’s activity is made available, free of charge, to one or several public authorities for the purpose of analytical research. Those public authorities declare to use the data for purposes of enhancing adaptation to climate change by the society in a region, country or internationally and the insurer provides the data at a level of granularity sufficient for the use declared by the respective public authorities.4.2. Where the insurer is not yet sharing such data with a public authority for the aforementioned purpose, it has declared the intention to make its data available, free of charge, to interested third parties and has indicated under which conditions such data can be shared. That declaration of intention to share available data is easily accessible, including on the insurer’s website, for relevant public authorities.5. High level of service in post-disaster situation:Claims under insurance activity, both ongoing and those from large-scale loss events resulting from climate risks, are processed fairly with respect to customers, in accordance with high handling standards for claims and in timely fashion in line with applicable law and there has been no failure to do so in the context of recent large-scale loss events. Information as regards procedures on additional measures in case of large-scale loss events is publicly available.