The sectoral notebooks of taxonomy #2: Insurance sector

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For the insurance and reinsurance sector, the objective is to measure:

  • the share of investments that are devoted to the financing of economic activities eligible for the taxonomy (“Investment Ratio“) as well as,
  • the share of gross premiums written in non-life insurance eligible for the taxonomy (“Non-life underwriting ratio”).

Investment ratio: relatively consistent results

Although not all the players have made exactly the same choices in terms of publication (voluntary or non-voluntary ratio, methodological interpretations, publication formats, etc.), this first exercise presents relatively homogeneous situations regarding the interpretation of the eligibility of assets as well as the results obtained for the mandatory ratios.

It should be noted that in the absence of information published by non-financial companies, insurers had no choice but to estimate the eligibility of their assets in the portfolio. Since these estimates are not accepted in the calculation of the Investment Ratio mandatory, they appear in the ratio published on a voluntary basis.

  • 55 % of insurers and reinsurers in the panel have published a voluntary ratio in addition to the mandatory ratio
  • 27 % of insurers and reinsurers have published a mandatory ratio equal to 0%
  • 88 % of insurers and reinsurers with mandatory ratio report numerator and denominator amounts

Determination of the Investment Ratio: analysis of methodological practices

The methodology for calculating the Investment Ratio is governed by Article 8 of the regulation on taxonomy.

Despite the additions provided by the European Commission’s FAQs of February 2, 2022, certain areas of interpretation persist in the implementation of the calculation.

However, we underline the important effort of most of the different actors of the panel in terms of transparency of the information published.

Infographics-general-principles-sector-books

Non-life underwriting ratio

The non-life underwriting ratios published by the insurers and reinsurers of the panel for the 2021 financial year are very heterogeneous: between 0% and 86%.

This heterogeneity is mainly linked to the nature of the main activity of the various players in the sector. : life insurance, non-life insurance, health and provident insurance, credit insurance or reinsurance.

In accordance with the “Taxonomy” regulation, only the provision of non-life insurance and reinsurance services linked to the subscription of protection against climatic hazards is considered to be able to contribute to adaptation to climate change.

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