Actuaries told to step up in climate fight

Actuaries have been told they need to put themselves in the front line of the insurance sector’s efforts to combat climate change by their regulator.

The call came as the Financial Reporting Council (FRC) the UK’s independent regulator responsible for issuing and maintaining technical actuarial standards published a consultation on proposed changes to Technical Actuarial Standard 100 which would require actuaries to include climate change risks in the course of their work.

Under the plans outlined the FRC is proposing to introduce a new requirement to ensure actuarial practitioners have regard to all material risk, including the consideration of Climate Change and ESG related risks, which they might reasonably be expected to know about at the time of carrying out their work.

The FRC’s executive director of regulatory standards, Mark Babington said: “Actuaries have a key role to play in considering risks and modelling of future events so that users of actuarial information can make informed decisions about material risks. As the importance of climate change risks continues to grow it is critical that actuaries consider these risks in the course of their work. The proposed amendments to TAS 100 are designed to ensure actuarial work remains fit for purpose within the rapidly changing environment in which actuaries operate.”

The FRC added: “Feedback carried out by the FRC has shown that whilst actuaries are well-versed in considering more established areas of risk, non-traditional risks such as climate change and other emerging risks are less well-considered.

“Actuarial work continues to evolve to reflect new practice areas, emerging risks, new modelling techniques and new ways of working.”

The consultation paper explained: “Actuarial work continues to evolve to reflect new practice areas, emerging risks, new modelling techniques and new ways of working. The proposed amendments are necessary to ensure TAS 100 remains appropriate within the changing environment in which actuaries operate. The proposed amendments also take into account the specific areas highlighted in the response to the CFF [ the FRC published a Call For Feedback (CFF) in February 20212] on where TAS 100 could be revisited or where guidance may be useful.

Actuaries and insurers have until 7 September to responded to the consultation.

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