The Australian Prudential Regulation Authority (APRA) is among a group of global regulators supporting a new international standard for the disclosure of climate risks by insurers.

The group, the Sustainable Insurance Forum, has welcomed recommendations and guidance from the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD).

California Insurance Commissioner Dave Jones says the TCFD’s global standard will help regulators assess how insurance companies are addressing climate-related risks and opportunities across underwriting and investment.

“It is important that financial institutions, including insurance companies, recognise and address potentially significant climate risks facing their investments in coal, oil and gas utilities,” he said.

The Sustainable Insurance Forum says the TCFD’s guidance will help “drive convergence in reporting, enabling comparison across the sector.”

It calls climate change “one of the most serious long-term challenges for the insurance sector and the wider financial system”, and says: “As risk manager, risk carrier and investor, the insurance sector plays a cornerstone role in the management of climate-related risks and opportunities.”

The Sustainable Insurance Forum identifies four areas in which supervisors can support uptake:

• Raising awareness of the TCFD recommendations among regulated businesses
• Working with market actors to build capacity and share tools, including for the development of scenarios and metrics
• Incorporating relevant insights from climate disclosures into routine supervisory activities
• Supporting the taskforce recommendations, or appropriate aspects, as best practice to be considered by insurers in their financial disclosures.