INSURERS could be at risk of taking a “huge hit” on their investments if public policy is changed to limit the use of fossil fuels.
Paul Fisher, deputy head of the Bank of England’s prudential regulation authority (PRA), made the warning to insurance companies yesterday. “One live risk right now is of insurers investing in assets that could be left ‘stranded’ by policy changes which limit the use of fossil fuels,” he stated.
Fisher also said climate change has the potential to hit firms through increasing claims activity, such as storms and floods, which could potentially “undermine the sustainability of businesses”.
However, he added that increases in risks gave companies an opportunity to grow by underwriting new products, and said the market had “already taken steps to stay ahead of the climate curve” with initiatives such as Flood Re.