Our Canadian partner, the Canada Climate Law Initiative, has produced a paper on ‘Life, Health, Property, Casualty: Canadian Insurance Company Directors and Effective Climate Governance’.
The insurance sector is important because it provides the financial safety net for many Canadians suffering losses associated with climate impacts. Insurance coverage is the guarantee that policyholder losses will be indemnified; yet climate-related weather events are growing in severity and frequency. Severe weather damage in Canada caused $2.4 billion in insured losses in 2020, and over half that amount was for flooding.
The guide sets out the legal duties of directors of insurers and offers insights into best practices, including how directors of insurance companies can begin to implement effective governance, strategies, risk management, targets, and metrics aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) framework. Under financial services legislation, directors have an obligation to ensure the company is managed prudently so that there is sufficient capital that the promises to insurance policyholders and to annuities beneficiaries can be met.