CFRF Underwriting Guides: Litigation and Physical Risk

Hear from members of the UK’s Climate Financial Risk Forum, as we dive into their brand-new publications on climate litigation and physical risk.

Part 1 | Litigation Risk Underwriting Guide | 00:00:00–00:15:54

Part 2 | Physical Risk Underwriting Guide | 00:15.54–00:36:13

The Climate Financial Risk Forum (CFRF) was set up in 2019 by the UK’s Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), to build capacity and share best practice across industry and the regulators to advance the sector’s responses to the financial risks from climate change.

In this special episode, we discuss the CFRF’s Litigation Risk and Physical Risk Underwriting Guides, which are available from 9 December 2022. The guides focus on risks that are particularly pertinent to the insurance industry, but are highly relevant to many financial firms. The guests were all heavily involved in producing these publications, so they’ll be sharing their thoughts and insights as a compliment to the papers themselves.

For the litigation portion of this episode, we will discuss:

• Why climate litigation risk deserves special attention from insurers;
• How financial firms are reacting to the fast-changing litigation landscape; and
• Key recommendations for financial institutions trying to understand their exposure to this risk.

And for the physical risk portion, we will discuss:

• The distribution of physical risks globally relative to the distribution of global insurance;
• The challenges of modelling complex hazards from climate change; and
• The capabilities that financial firms can build and the strategies they can adopt to deal with highly uncertain risks.

Links from today’s discussion:

• CFRF’s Litigation Risk Underwriting Guide
• CFRF’s Physical Risk Underwriting Guide
• Other CFRF 2022 publications
• Results of the 2021 Climate Biennial Exploratory Scenario (CBES)
• Nigel’s previous appearances on the Climate Risk Podcast and the Climate Risk Webcast
• Grantham Institute’s 2022 Global Climate Change Litigation Snapshot
• Geneva Association’s 2021 Global Report on Climate Litigation
• UN’s Net-Zero Insurance Alliance (NZIA) homepage

Speaker’s Bios

Nigel Brook, Partner, Clyde & Co.

Nigel has been a partner at Clyde & Co since 1985 and heads the firm's reinsurance team. An international insurance and reinsurance disputes specialist with over 30 years' experience, Nigel is considered by many to be one of the top insurance lawyers worldwide.

He leads Clyde & Co’s global campaign on Resilience and Climate Change Risk, building a body of know-how and raising awareness of climate-related legal duties and potential liabilities. He is a member of the Law, Regulation and Resilience Policies Working Group of the Insurance Development Forum – a public/private partnership seeking to optimise and extend the use of insurance and the industry's risk management capabilities to protect those most vulnerable to disasters. He co-authored the firm's 2018 Reports on Parametric Insurance and Inclusive Insurance – exploring the role of innovative risk transfer in closing the global protection gap – and has authored and edited Clyde & Co's 2018/19 series of reports on the rising tide of Climate Change liability and duties of care.

Paul Barrett, Chief Risk Officer, AIG UK

Paul is Chief Risk Officer for AIG UK. He is also the designated ‘Senior Manager’ for Climate Change Risk. Paul reports jointly to the Board of AIG UK and Fabrice Brossart, CRO, GI International. Paul’s team is responsible for the Risk Governance, ORSA, Stress Testing, Risk Register, Risk Appetite & Limits and Operational Risk processes. Paul also works closely with the Group in helping to develop AIG’s Climate Strategy. Previously Paul was Assistant Director, Solvency II at the Association of British Insurers (ABI). Prior to that Paul worked in Policy at the Financial Services Authority.

Shane Latchman, VP and Managing Director, Verisk

As a vice president and the managing director of Verisk’s Extreme Event Solutions team in London, Shane Latchman is involved in many of Verisk’s extreme event models and Touchstone initiatives, such as the integration of third-party data and models, expanding Verisk’s capabilities in marine and energy, climate change quantification, and the Next Generation Financial Module. He interacts frequently with rating agencies and regulators on topics such as stress tests, climate change, and the Solvency II directive on EU insurance regulation. 

Shane joined Verisk after receiving his master’s degree in 2008. Shane sits on and collaborates with various industry working groups, committees, and boards, including Bank of England, Open Data Standards, Insurance Development Forum, and Cass Business School. He writes and speaks frequently on topics related to catastrophe risk and climate change.

Joss Matthewman, Senior Director of Climate Change Product Management & Strategy, RMS

Joss rejoined RMS in 2020 as Senior Director of Climate Change Product Management. Prior to this Joss was Head of Catastrophe Exposure Management at Hiscox, responsible for natural catastrophe, war, terror and political violence exposure management and reporting across the group.

Before joining Hiscox, Joss spent seven years in model development at RMS where he worked on the North Atlantic Hurricane and Asia Typhoon models, before being appointed Head of Storm Surge Modelling. During this period Joss joined the PRA working group on climate change which he continues to engage with today. Prior to entering the insurance industry Joss obtained a PhD in Applied Mathematics from UCL and worked as a postdoctoral researcher in climate science at the University of California, Irvine. His published areas of research include stratospheric sudden warmings, and the impact of sea-ice on global atmospheric teleconnections.