Exit this survey
View full consultation paper here

Question Title

* 1. MAS proposes to apply the Guidelines to all insurers, including insurers carrying on business in Singapore under a foreign insurer scheme established under Part IIA of the Insurance Act (Cap. 142).

MAS proposes to apply the Guidelines to insurers’ underwriting and investment activities. An insurer should also apply the Guidelines to other activities that expose it to material environmental risk.

Question 1. MAS seeks comments on the entities and business activities that are in the proposed scope of the Guidelines.

Response to question 1:

Question Title

* 2. The Guidelines set out MAS’ expectations on the Board and senior management to incorporate environmental considerations into the insurer’s risk appetite, strategies and business plans, and to effectively oversee the insurer’s environmental risk management. The proposed responsibilities of the Board include approving an environmental risk management framework and policies, and setting clear roles and responsibilities of the Board and senior management. MAS also proposes that the Board ensure that environmental risk, where material, is addressed in the insurer’s risk appetite framework, so that environmental risk exposures beyond the insurer’s risk appetite can be promptly recognised and addressed. The proposed responsibilities of senior management include developing an environmental risk management framework and policies, regularly reviewing their effectiveness, and allocating adequate resources to manage environmental risk.

MAS further proposes that where environmental risk is deemed material to an insurer, the insurer should designate a senior management member or a committee to oversee environmental risk. This would promote clarity in accountability over environmental risk management, to ensure that such issues are reviewed at a sufficiently senior level.

Question 2. MAS seeks comments on the proposed responsibilities of the Board in overseeing environmental risk management, including its role in ensuring that environmental risk, where material, is addressed in the insurer’s risk appetite framework.

Response to question 2:

Question Title

* 3. Question 3. MAS seeks comments on the proposed responsibilities of senior management in overseeing environmental risk management, including its role in developing an environmental risk management framework and policies, regularly reviewing their effectiveness, and allocating adequate resources to manage environmental risk.

Response to question 3:

Question Title

* 4. Question 4. MAS seeks comments on the proposal for insurers to designate a senior management member or a committee to oversee environmental risk, where such risk is material.

Response to question 4:

Question Title

* 5. At the customer level, MAS proposes for the insurer to undertake an environmental risk assessment of each customer as part of its assessment process for credit facilities or capital markets transactions, particularly for sectors with higher environmental risk. To inform its assessment, the insurer should develop sector-specific policies, which articulate its expectations towards customers in sectors with higher environmental risk. For transactions with higher environmental risk, MAS proposes for the insurer to undertake enhanced due diligence, and escalate to an internal committee or appointed individual for approval where applicable. Such processes are intended to bring about a greater level of scrutiny and accountability on such transactions, and ensure that the insurer’s exposures to environmental risk are well understood and managed. The insurer should also engage each customer that poses higher risk, to improve its environmental risk profile, and support its transition towards sustainable business practices.

MAS also proposes for the insurer to develop capabilities in scenario analysis and stress testing to assess the impact of environmental risk on its risk profile and business strategies, and explore its resilience to financial losses. These scenarios should incorporate forward-looking information to complement historical data, as the latter might systemically underestimate potential risks, in view of the uncertainties and long-term horizon associated with changes in the environment.

Question 5. MAS seeks comments on the expectation for insurers to engage each customer that poses higher environmental risk to improve its risk profile and support its transition towards sustainable business practices.

Response to question 5:

Question Title

* 6. Question 6. MAS seeks comments on whether there are specific aspects of environmental risk management policies and processes that would benefit from further supervisory guidance.

Response to question 6:

Question Title

* 7. MAS proposes for insurers to incorporate environmental risk considerations into the underwriting process, taking into account the insurers’ overall risk management framework and risk appetite. Where the insurer has an existing relationship with a customer who does not manage the environmental risk adequately, the insurer should consider various options such as pricing in the additional risk, applying specific limits on underwriting exposure, and re-assessing the relationship with the customer, which may include exiting the relationship.

Where customers are assessed to have a higher environmental risk profile, the Guidelines set out the escalation and monitoring processes that the insurer should undertake, such as in-depth due diligence and developing tools and metrics to monitor its underwriting exposures to environmental risk. Such tools would enhance the insurer’s capacity to measure the impact of environmental risk on its business, and take appropriate mitigating measures to manage significant risk in its portfolio. For example, these metrics may be used to assess the insurer’s underwriting exposures to geographical areas and sectors with higher environmental risk, or measure the carbon intensity of customers in high-risk sectors.

Question 7. MAS seeks feedback on the insurers’ escalation and monitoring frameworks in relation to the underwriting process in considering environmental risk, as well as the expectation for insurers to develop tools and metrics to monitor the insurers’ underwriting exposures to environmental risk, and examples of the aforementioned tools and metrics that may be adopted.

Response to question 7:

Question Title

* 8. From an asset selection perspective, MAS proposes measures that the insurer should undertake to ensure that it can monitor the inherent environmental risk in its investment portfolios. The insurer should also take into consideration the impact of environmental risk on its investment portfolio under various stress scenarios and time factors.

The proposed Guidelines also aim to promote responsible business behaviour by encouraging insurers to work on environmental related issues with companies who are particularly exposed to such environmental risk.

Question 8. MAS seeks comments on the proposed and any additional measures that can be used to help the insurer monitor and mitigate the environmental risk inherent in the investment portfolio.

Response to question 8:

Question Title

* 9. MAS proposes that an insurer discloses, at least annually, its approach to managing environmental risk and the potential impact of material environmental risk on the insurer. The latter includes quantitative metrics such as exposures to sectors with higher environmental risk. An insurer’s disclosure may be consolidated at the group3 or head office level.

MAS also proposes that insurers take reference from international reporting frameworks, including the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”), to guide their environmental risk disclosure. The TCFD recommendations provide a useful framework for the disclosure of climate-related risks.

Question 9. MAS seek comments on the proposed form and frequency of disclosure of environmental risk by an insurer.

Response to question 9:

Question Title

* 10. Question 10. MAS seeks comments on any aspects of the Guidelines that have not been covered in earlier questions.

Response to question 10:

Question Title

* 11. Question 11. MAS requests for examples of sound risk management practices currently implemented by insurers, which would meet the expectations in the Guidelines.

Response to question 11:

Question Title

* 12. Question 12. MAS seeks comments on the proposed implementation approach, including the proposed transition period of 12 months.

Response to question 12:

Question Title

* 13. CFA ID (Optional)

Question Title

* 14. Please fill in your particulars below:

Question Title

* 15. I wish to keep the following confidential (Optional):

( Privacy & Cookie Notice

T