david rule : managing risk in a soft market speech by mr david rule, executive director of insurance supervision of the bank of england, at the general insurance research organisation conference, dublin, 21 september 2016. * * * good morning. this is my first speech as the bank ’ s executive director for insurance supervision. since i took on this role in july, i have been trying to meet with as many chief executives and chairmen of uk insurers as possible. i have been struck by the variety of business models and strategies but one theme has dominated discussions of the risks facing insurers : the current low rate environment. for life insurers, this can create direct solvency pressures to the extent that they are not fully matched against the increasing value of their future liabilities as discount rates fall. that can also be an issue for some general insurers with long tail liabilities. more generally, low investment returns mean earnings on the “ float ” can no longer cushion a poor underwriting performance. the margin for error in the running of general insurance firms has reduced – firms have to underwrite profitably. on the positive side, this emphasises the importance of underwriting discipline. the soft market but of course the current soft market makes profitable underwriting more difficult to achieve. i am going to focus my remarks today on the wholesale london markets. although i have been told of some tentative signs of premium rates stabilising recently, they have been falling across most wholesale lines for around a decade now. for example, guy carpenter ’ s global property catastrophe rate - on - line index has reduced by more than a third since its peak in 2006. our market survey earlier this year found further year - on - year declines ( chart 1 ). looking at the possible causes of the current soft market, it is surely in part just another manifestation of the wider low return environment. the most obvious evidence is the inflow of capital to the market from institutional investors. perhaps to a greater extent than historically, insurance is interconnected with wider capital markets and market forces have driven expected returns more into line with other investment opportunities. these wider pressures may explain a squeeze on profits. but insurers should still be pricing to cover their view of risk. at the beginning of 2016 we carried out a survey that captured views on the rate adequacy of new and renewed business. the results suggested that the estimated rate adequacy of new business is, in most cases, higher than renewed business

remarks given at a panel to launch the third annual america ’ s pledge report, at the 25th annual conference of the parties mark carney governor of the bank of england us climate action centre, madrid 10 december 2019 i am grateful to jennifer nemeth for her assistance in preparing these remarks. all speeches are available online at www. bankofengland. co. uk / news / speeches introduction the accelerating america ’ s pledge report comprehensively documents the scale of change that is needed across our economies to put emissions on a trajectory consistent with building a net zero economy. that will require a more sustainable financial system. changes in climate policies, new technologies and growing physical risks will prompt reassessments of the values of virtually every financial asset. firms that align their business models with the transition to net zero will be rewarded handsomely. those that fail to adapt will cease to exist. now is the time to ensure that every financial decision takes climate change into account. for that change to happen, we need to focus on the three rs – reporting, risk management and return. first, reporting in 2015, g20 leaders tasked representatives from the public and private sectors to review how the financial system takes into account climate risks. we established a task force on climate - related financial disclosures ( tcfd ), chaired by mike bloomberg. four years on, the tcfd has generated a step change in both the demand for and supply of climate reporting. the demand for tcfd disclosure is now enormous. current supporters control balance sheets totalling $ 120 trillion and include the world ’ s top banks, asset managers, pension funds and insurers. the supply of disclosure is responding, with four fifths of the top 1100 global companies now disclosing climate - related financial risks in line with some of the tcfd recommendations. on every recommended metric in tcfd, disclosures have been steadily increasing. three quarters of major investors surveyed are now using available tcfd disclosures when investing. mike bloomberg ’ s path - breaking initiative on climate disclosure is creating the platform to bring sustainable to the finance mainstream. now we must build on this foundation by : first, over the next year, enhancing both the quality and quality of disclosures to make tcfd standards as comparable, efficient and as decision - useful as possible. and, by cop26, exploring pathways to make tcfd disclosure mandatory. all speeches are available online at www. bankofengland. co. uk /