The Irish Central Bank has urged insurance companies to take into account “climate change risks” when offering insurance in their line of work.
The bank claimed that because of weather-related insurance claims and “necessary actions to transition away from greenhouse gases,” insurance companies should take action to “manage climate change risk.”
“The increased frequency and severity of weather related events linked to climate change is already having an impact on the insurance sector globally,” the bank said in a statement.
The group added that “climate change risk is a key risk” which should be taken seriously in the short, medium and long term.
In May of 2021, the bank published its “Climate and Emerging Risk Survey” which found that over half of Irish insurers “did not have a climate-change risk management strategy, plan or policy in place.”
Overall, only 20% fully integrate climate change risk into their risk management, according to the survey’s results.
The survey also found that the vast majority of firms have done no scenario analysis as to how climate change might impact their business’ assets or liabilities.
“The majority have not performed forward looking quantitative analysis (stress testing or scenario analysis) to assess the impact of climate change on their assets (77%) or liabilities (79%),” the report reads.
In recent years there have been numerous media reports of major flooding risks to coastal cities as a result of climate change. Moreover, as much as 40% of the Irish population lives in a coastal city or town.
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However, despite these warnings, it is still possible to acquire a 30 year mortgage on a coastal property from a bank.
In a previous article Gript reported how Dublin City council has spent millions of euros on buying properties near the coast, in areas which climate activists have said will be underwater within three decades.
Gript asked the Central Bank if they expected climate change projections about sea level rise to have an impact on mortgages or insurance rates in the coming years.
A spokesperson replied with a cryptic answer, simply saying:
“Strengthening the resilience of the financial system to climate-related risks and its ability to support the transition to a low-carbon economy is an integral theme in the Central Bank’s multi-year Strategy.
In 2021, the Central Bank established a dedicated Climate Change Unit to help steer the agenda and bring focus to our work in this area. We recently hosted the inaugural meeting of the Climate Risk and Sustainable Finance Forum, which, chaired by Deputy Governor Sharon Donnery, provides a consultative forum for building a shared approach to the understanding and management of the risks and opportunities posed by climate change to the financial system.
Its membership comprises climate change experts, representative bodies, regulated firms and representatives from the Central Bank.”