In 2017, the record $ billion of insured losses were eclipsed by an additional $ billion of uninsured ones.11 In some of the countries most exposed to climate change - Bangladesh, India, Vietnam, Philippines, Indonesia, Egypt and Nigeria - insurance penetration is under 1%.12 The potential economic benefits of closing the insurance gap are striking. Lloyd’s of London estimates that a 1% rise in insurance penetration can translate to a 13% reduction in uninsured losses and over 20% reduction in disaster recover burden on taxpayers. Substantial macroeconomic benefits include increased investment, higher output (potentially up to 2% of GDP) and greater climate resilience.13 Despite this prize, progress is proving stubbornly slow – over the past 30 years the gap has narrowed by only from 78% to 70% globally, underscoring the importance of the IDF’s work.14 The role of insurance for adaptation and resilience So what should be done? 10  Munich Re (2019), The natural disasters of 2018 in figures, See: https://www.munichre.com/topics-online/en/climate-change-and-naturaldisasters/natural-disasters/the-natural-disasters-of-2018-in-figures.html. 11 Swiss Re institute (2018). See: https://www.swissre.com/institute/research/sigma-research/sigma-2018-05.html. 12 See Lloyd’s of London global underinsurance report (2018). Available online at: https://www.lloyds.com/~/media/files/news-and-insight/riskinsight/2018/underinsurance/lloyds_underinsurance-report_final.pdf. 13 Lloyd’s City Risk Index, 2015-2025 (2015), available at: https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/risk/downloads/crslloydscityriskindex-execsummary.pdf. 14 Geneva Association, Understanding and Addressing Global Insurance Protection Gaps (2018). See: https://www.genevaassociation.org/sites/default/files/research-topics-documenttype/pdf_public/understanding_and_addressing_global_insurance_protection_gaps.pdf. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Both sides of insurers’ balance sheets need to respond. On the liability side, the focus must be reducing the protection gap and supporting the resilience of households and companies to growing climate risks.

Catalysed by the G20 and created by the private sector, the Task Force on Climate-related Financial Disclosures (TCFD) is a comprehensive, practical and flexible framework for corporate disclosure of climate-related risks and opportunities.1 The demand for TCFD disclosure is now enormous. Current supporters control balance sheets totalling $ trillion and include the world’s top banks, asset managers, pension funds, insurers, credit rating agencies, accounting firms and shareholder advisory services.2 The supply of disclosure is responding, with four fifths of over 1100 top G20 companies now disclosing climate-related financial risks in line with some of the TCFD recommendations, and three quarters of users of the information seeing a marked improvement in the quality of climate disclosures.3 The next step is to make these disclosures mandatory. The UK and EU have already signalled their intents.4 It’s time for every country to get involved because the world won’t get to net zero if the financial sector doesn’t know how our companies are responding. In order to watch we must be able to see. 1  Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017) available at: https://www.fsbtcfd.org/wpcontent/uploads/2017/06/FINAL-2017-TCFD-Report-11052018.pdf. 2 Full list of current TCFD supporters available at: https://www.fsb-tcfd.org/tcfdsupporters/. 3 Task Force on Climate-related Financial Disclosures: Status Report (June 2019) available at: https://www.fsbtcfd.org/wpcontent/uploads/2019/06/2019-TCFD-Status-Report-FINAL-053119.pdf. 4 The UK has already announced in its Green Finance Strategy published in July 2019 that it expects all listed companies and large asset owners to report climate risks by 2022. A joint taskforce with UK regulators is considering the most appropriate path to mandatory disclosure.