Climate and Sustainability Working Group Becomes a Practice Committee
The Institute is excited to announce that the Climate & Sustainability Working Group has become a Practice Committee, reflecting the maturity of the group and the ongoing strategic importance of its work to the profession and Institute.
We’d like to take this opportunity to share the exciting future work program of the Committee and celebrate the key milestones to this point.
Strategic priorities for the Climate and Sustainability Practice Committee in the coming year are:
- Continuing to deliver a stream of exciting and engaging events, articles and resources on climate and sustainability issues relevant to actuaries;
- Developing education and CPD offerings tailored for actuaries in the areas of climate risk and sustainability; and
- Updating the Australian Actuaries Climate Index (AACI) to use the latest available datasets, and extend its coverage to include extra indicators relevant to tropical cyclone risk and bushfire risk.
Looking back there are many points of the growth journey to celebrate.
Nearly nine years ago, in late 2015, the Actuaries Institute launched its first Public Policy Statement, on the topic of climate change. That statement was driven by the early work of this group. At the time, the United Nations was debating the Paris Agreement and in Australia there had been years of high uncertainty around public policy settings to address climate change. The statement was most recently updated in 2020. The Institute’s Public Policy Statements provide important markers for our members and external stakeholders to understand the Institute’s position on key societal issues, and the role that the Institute and profession can play in navigating the change and uncertainty involved.
In November 2018, the Institute launched the Australian Actuaries Climate Index (AACI), with quarterly updates since. The Index is an objective measure of extreme weather conditions and changes to sea levels, designed to help policymakers and Australia’s businesses assess how the frequency of weather extremes is changing over time. Unlike many other measures, the AACI focuses on changes in the extremes because this is a more relevant metric for the insurance industry (and some others) than averages as it correlates more closely with losses and damage to lives, livelihoods and assets. This is done by measuring how often we observe conditions and sea levels exceeding the 99th percentile (the most extreme 1 per cent) of those during the reference period of 1981-2010.
Since then, members of the group and authors commissioned by the Institute have been a leading voice in the debate on home insurance affordability, developing uniquely actuarial insights. Inspired by the work of Tim Andrews (a former member of the group) and Stephen Lau (and illustrated in this presentation to the Institute’s General Insurance Seminar in 2018), the Institute has published a very well received series of papers – Property Insurance Affordability: Challenges and Potential Solutions in 2020, Home Insurance Affordability and Socioeconomic Equity in a Changing Climate in 2022 and which includes how this changes under scenarios to 2050, and the Home Insurance Affordability Update and accompanying report on Funding for Flood Costs: Affordability, Availability and Public Policy Options in 2023.
In 2020, we were one of the first actuarial professional bodies in the world to support our members with an outline of how insurance operations may be impacted by climate change and suggestions to address these issues in the Climate Change – Technical Paper for Appointed Actuaries (AAs) (originally published in 2020 and updated in December 2023). While intended to specifically support AAs, this document is highly informative for all actuaries and other professionals working in insurance and investment management.
Throughout this time the group and wider volunteers have supported contributions to many public consultations and inquiries on climate risk and more recently the broader topic of sustainability. Notable examples have been to the development of the initial National Adaptation Plan (April 2024), Sustainability Reporting Standards (February 2024), Sustainable Finance Strategy (December 2023), the cyclone reinsurance pool (June and December 2021), APRA’s initial prudential practice guide on Climate Change Financial Risks (July 2021), the Royal Commission into National Natural Disaster Arrangements (April, May and September 2020), including a former chair of the group appearing as an expert witness before the Royal Commission, and the ACCC’s Northern Australia Insurance Inquiry (October 2019 and November 2017). All submissions can be accessed here.
The Institute acknowledges the contributions by the many volunteers who are past and present members of the group and the wider network of volunteers and authors of papers in this area. Collectively their efforts and insights have helped support more objective and informed decision-making in one of the key areas of risk and opportunity for the Australian and global economy.
Specific thanks is given to the leadership of the group over its life course so far; to Sharanjit Paddam as its inaugural Chair, Rade Musulin and current Chair Ramona Meyricke.
For further details about the CSPC please visit the microsite.
CPD: Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.
