Opening Remarks by IMF Managing Director Kristalina Georgieva at the Insurance Development Forum Summit
IMF News, June 7, 2021
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- Opening Remarks by IMF Managing Director Kristalina Georgieva at the Insurance Development Forum Summit
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- Published: June 7, 2021
Overview
- Remarks delivered on June 7, 2021.
- Core IMF mandate referenced: promoting macroeconomic and financial stability, growth and employment.
- Three focal areas addressed:
- Building resilience to climate shocks and accelerating the transition to the new climate economy.
- Identifying and managing climate-related financial risks for the insurance industry.
- Unlocking the potential of the insurance industry as a source of financing in the climate transformation.
Building resilience
- Insurance industry credited with advances in climate risk monitoring, modeling, and integration of those risks into insurance products.
- IMF engagement:
- Deepening understanding of climate risks and ways to reduce them.
- Integrating insurance industry risk assessment into IMF work, including regular country assessments and financial sector assessments (FSAPs).
- Supporting countries to develop and adopt forward-leaning insurance products and expand insurance coverage for sovereigns, businesses, and households.
Making insurers more resilient
- Key enablers: high-quality disclosure standards, improved data, and stress-testing for climate-related risks.
- Governance and reporting:
- Support noted for the G7 agreement to move towards mandatory disclosure of climate-related risks and to standardize reporting.
- Observation that there remain some 200 frameworks for reporting; aim is to standardize reporting by COP26.
- IMF operational steps:
- Move to stress-testing for climate-related risks.
- Integrate standardized reporting into FSAPs.
- Current FSAP coverage and targets:
- FSAPs cover some 12 countries per year.
- Climate-related risks have been included in one in five of these assessments.
- Goal to move to full coverage within 18 months.
Insurance money for green finance
- Research finding cited: a green infrastructure push—coordinated across economies—can boost global GDP in the next 15 years by 0.7 percent per year and create millions of new jobs.
- Barriers to insurer investment in emerging and developing economies:
- Prohibitions or very tight limits on insurer investment in infrastructure projects.
- Capital requirements that often overestimate the risks of such investments.
- Policy implications:
- Reducing regulatory barriers and reflecting risks more accurately can be a global game changer for mobilizing insurance capital into green infrastructure.
IMF commitments and collaboration
- IMF seeks to work with the insurance industry to:
- Share best practices on risk assessment and resilience-building.
- Support expansion of insurance coverage at sovereign, business, and household levels.
- Advance policies to reduce barriers to insurer investment in infrastructure and improve risk calibration in regulation.
- Emphasis on collective action: accelerating the transition to a greener and more resilient economy requires coordinated efforts among institutions and the financial sector.
Source: Opening Remarks by IMF Managing Director Kristalina Georgieva at the Insurance Development Forum Summit (June 7, 2021).