Natalie Haanwinckel Hurtado 26/11/2017 IAIS Global Seminar 2017 29 – 30 June, London Sustainability in Insurance Supervision in Brazil Natalie Haanwinckel Hurtado

WHAT Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution WHAT Climate Change is already a reality for the world today. For the insurance sector, ESG risks approach is a question of survival in terms of solvency. Source: www.theguardian.com

WHAT Planning an Implementation for a Solution 26/11/2017 Source: www.susep.gov.br

WHY Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution WHY Because it is not an issue which impacts are restricted to just one country or economy sector, it must be addressed by every person, sector and nation. Insurance sector worldwide accumulates growing losses associated to natural catastrophes: Source: Swiss Re Economic Research & Consulting and Cat Perils.

WHY Planning an Implementation for a Solution Brazil 26/11/2017 Source: Sustenseg/Terra Brasis

WHEN Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution WHEN The search for solutions is past due. The Sustainability Insurance Forum (SIF – UNEP-FI) has started the discussions for the Insurance Supervisory Authorities. Brazil has many insurance companies involved with the issue and that are signatories of the Principles for Sustainable Insurance (PSI – UNEP-FI). However, the great majority of them understand sustainability initiatives as actions of internal process (water and energy economy, solid residuals disposal etc) and not as an strategic position that must encompass underwriting, asset and liability managements and consumer´s treatment (design of relevant, accessible and affordable products and services, transparent selling relationship and fast indenisation/benefit payments).

WHO Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution WHO Consumers: new generations are much more aware and involved in sustainable issues, demanding increasingly more transparent information about the products and services they consume. Insurance companies: they are the ones that can really make things happen. They need to reinvent consumer focused services and solutions. Risk carriers Risk transfers Investors Insurance supervisors: behaviour drivers for the transition. Must incorporate ESG approach to their Risk Based Supervision framework on prudential and conduct of business issues. UNEP-FI Sustainable Insurance Forum for Supervisors – SIF Others

WHERE Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution WHERE In the whole insurance value chain: design of products/services, underwriting, selling, asset and liability risk management, payment process. For all kinds of coverage: life, property and casualty. For all consumers: insured and not insured (corporations/microinsurance/inclusive insurance). This means that, the concept of sustainability in insurance in not one more risk topic or a new coverage to be addressed, but a perspective that must be underlying the entire business.

HOW Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution HOW Insurtech: the intensive use of digital technology is fundamental for improving methods of risk analysis, underwriting, risk management and claims payment. Besides improving the processes and lowering costs, technology can help data and information gathering and identifying where the public is and what it needs. Artificial intelligence Internet of things Blockchain Multilateral cooperation: need to dialogue with other sectors of the economy or even other governmental levels and countries to develop jointly solutions related to climate change, build code and land use, natural disasters, water crisis (draughts or floods) etc.

HOW MUCH Planning an Implementation for a Solution 26/11/2017 Planning an Implementation for a Solution HOW MUCH SUSEP´s survey brought out the knowledge that most of PSI signatories and others that demonstrate understanding and commitment to ESG issues don´t incorporate them to their daily core business activities . Their actions are much more focused on internal commercial operations of water and energy economy, solid residuals disposal, reuse of paper etc. In order to foster true engagement of the core business insurance activities, one of the proposals is requiring a disclosure framework on the basis of FSB recommendations of the financial impacts caused or probable to be caused by climate change in the balance sheet. Other proposal to incentivize a better behaviour before the ESG issues is to create a seal of quality for the best initiatives to be publicized at SUSEP´s homepage. All of these proposals aim to give transparency for investors and consumers as well as conscience to insurers about their role and importance before ESG issues.

Contact: natalie.hurtado@susep.gov.br Natalie Haanwinckel Hurtado 26/11/2017 Thank you! Contact: natalie.hurtado@susep.gov.br Natalie Haanwinckel Hurtado