The Insurance Bureau of Canada (IBC) has defended the country’s property & casualty insurers following the release of Investors for Paris Compliance’s (I4PC) report earlier this week.
I4PC’s “Playing with Fire: Canadian Insurers and Fossil Fuels” report pointed to the industry’s alleged role in “contributing to the problem” surrounding climate change.
“The industry is engaging in a major contradiction – despite recognizing the threat climate change poses to its business, property and casualty insurance companies foster that threat via underwriting and investing in the fossil fuel sector to the tune of billions of dollars,” I4PC senior policy analyst Kiera Taylor said.
“As the industry seeks government assistance to manage climate impacts, taxpayers have every right to demand that these companies stop contributing to the problem.”
In a statement to Insurance Business, IBC asserted: “The global financial community has been grappling with the issue of climate-related risks. Canada’s property & casualty insurers operate in a competitive marketplace, which allows them to make their own strategic investing and underwriting decisions. While one company may decide not to underwrite a certain type of risk, others may choose to assume it as part of their business strategy.
“The claims made within the Investors for Paris Compliance report paint an inaccurate picture of the considerations related to climate change-related risk management. There are roughly 1.5 million Canadian households that are highly exposed to flooding but lack access to flood insurance. This is due, in part, to previous land-use planning decisions that have contributed to communities being built in high-risk and low-lying areas of the country, prone to flooding.”
The trade body went on to highlight that the industry has “stepped up” to partner with federal and local governments to shift the financial costs away from taxpayers with a flood insurance program delivered by the sector on a not-for-profit basis.
“This national flood insurance program, implemented as early as 2025, will help better protect those households at the highest risk of flooding,” IBC noted. “The program’s implementation is one of the most important steps Canada can take to better protect homeowners from the financial risks of climate change today.
“Canadian P&C insurers are actively working with federal and provincial regulators, including OSFI (Office of the Superintendent of Financial Institutions), on requirements to disclose their emissions, climate risks and opportunities starting in fiscal year-end 2025, with larger companies reporting in fiscal year-end 2024.”
It added that insurers are also required, under an OSFI guideline, to develop climate transition plans.
“The transition to a low carbon economy must be undertaken in a thoughtful and measured way,” the association said. “IBC will continue to work with insurers, business leaders, and governments as the country transitions to a resilient and low-carbon economy while maintaining a healthy economy.”
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