Xinhua, London :
Paul Fisher, deputy head of the British financial regulator Prudential Regulation Authority (PRA), Tuesday said insurers should be alerted to the fossil fuel assets risk that might be affected by climate change legislation.
Speaking at the Economist’s Insurance 2015 conference here, Fisher said that there are a number of societal, regulatory or environmental changes currently at play, as well as risks concerning global warming, globalization, digitization, demographic changes and cyber attack in the insurance industry.
Fisher said: “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.”
“As the world increasingly limits carbon emissions, and moves to alternative energy sources, investments in fossil fuels and related technologies-a growing financial market in recent decades-may take a huge hit,” he said.
Fisher said the insurance sector, by absorbing and laying off risk, plays a “fundamental role” in fostering a stable economy. He said the industry fulfils social functions including the provision of income security in retirement, income protection whilst in work, funding for health care services and preserving the continuity of businesses subject to unexpected shocks.
He suggested that insurers will need to deal with the PRA in an open, co-operative and constructive manner to allow the regulator to understand whether the business model is sustainable and to identify key vulnerabilities.
PRA, as an arm of the Bank of England, is responsible for the regulation and supervision of banks, building societies, credit union, insurers and major investment firms that domiciled in Britain.
In total, the regulator supervises around 1,700 financial firms.
Paul Fisher, deputy head of the British financial regulator Prudential Regulation Authority (PRA), Tuesday said insurers should be alerted to the fossil fuel assets risk that might be affected by climate change legislation.
Speaking at the Economist’s Insurance 2015 conference here, Fisher said that there are a number of societal, regulatory or environmental changes currently at play, as well as risks concerning global warming, globalization, digitization, demographic changes and cyber attack in the insurance industry.
Fisher said: “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.”
“As the world increasingly limits carbon emissions, and moves to alternative energy sources, investments in fossil fuels and related technologies-a growing financial market in recent decades-may take a huge hit,” he said.
Fisher said the insurance sector, by absorbing and laying off risk, plays a “fundamental role” in fostering a stable economy. He said the industry fulfils social functions including the provision of income security in retirement, income protection whilst in work, funding for health care services and preserving the continuity of businesses subject to unexpected shocks.
He suggested that insurers will need to deal with the PRA in an open, co-operative and constructive manner to allow the regulator to understand whether the business model is sustainable and to identify key vulnerabilities.
PRA, as an arm of the Bank of England, is responsible for the regulation and supervision of banks, building societies, credit union, insurers and major investment firms that domiciled in Britain.
In total, the regulator supervises around 1,700 financial firms.
