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23 - Integration of Sustainability Risks and Sustainability Factors in Insurance Regulation

from Part IV - Ensuring Financial Stability and Sustainability

Published online by Cambridge University Press:  30 January 2025

By
Arthur van den Hurk
Edited by
Kern Alexander ,
Matteo Gargantini  and
Michele Siri
Kern Alexander
Affiliation:
University of Zurich
Matteo Gargantini
Affiliation:
University of Genoa
Michele Siri
Affiliation:
University of Genoa
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Summary

This chapter discusses the integration of sustainability risks and factors into insurance regulation. According to the European Commission, sustainability considerations should be placed at the heart of the financial system. In its Action Plan, the European Commission announced its intention to clarify the integration of sustainability in so-called fiduciary duties in sectoral legislation. The objective of the European Commission is to direct financial and capital flows to green investment and to avoid stranded assets, which could be facilitated if sustainability is more clearly integrated in such duties of financial undertakings. This chapter describes the wide range and variety of developments in this area, which reflects some of the unique characteristics of the insurance sector, and which provides opportunities to contribute to the EC’s sustainability agenda. This contribution is not limited to the provision of considerable financial contributions to the sustainable investment agenda, which is closely related to the fiduciary duties of insurers and the application of the prudent person principle, but relate as well as to other elements of the sustainability agenda and resilience of the European economy, for which the insurance and reinsurance sector is well positioned to provide a meaningful support, for instance by addressing the protection gap.

Keywords

insurance regulationSolvency II frameworkquantitative prudential requirementsqualitative requirementsfiduciary dutiesown risk and solvency assessmentclimate change-related risksprudent person principlesustainability preferences
Type
Chapter
Information
The Cambridge Handbook of EU Sustainable Finance
Regulation, Supervision and Governance
 , pp. 596 - 621
Publisher: Cambridge University Press
Print publication year: 2025

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