This article originally appeared in the CIA (e)Bulletin.
By Marc Tardif, FCIA
Since my last update, the federal political landscape has completely changed. Today we find ourselves with a minority government, which by nature carries with it no shortage of uncertainty and reservations. A glimpse at the electoral map reveals a polarization of Canadians across the country. But the fact remains that irrespective of the political landscape, our profession’s guiding principle will always be to put the interests of Canadians first.
Today, the risks posed by climate change and the impact of the various mitigation measures are among Canadians’ chief concerns. In his article on “Climate change and Canada’s Property and Casualty Insurance Industry” published recently in the series Enterprise Risk Management 2019: The New Wave of Risks, Paul Kovacs sets out the risks posed by climate change for Canada’s P&C insurance industry. I invite you to read it. Mr. Kovacs cites the warnings issued by Mark Carney, Governor of the Bank of England, that failure to adequately address climate change risks is an emerging threat to the stability of the financial system.
When we published our statement on climate change on September 24, all eyes were glued to Canada’s federal election campaign. And yet we still managed to get the attention of multiple government and industry stakeholders. In recent weeks, the statement has served as a kicking-off point for some noteworthy preliminary discussions in which the public interest has been front and centre.
Climate meetings: a promising start
We met with the Responsible Investment Association (RIA), a Canadian industry group that advocates incorporating environmental, social, and governance (ESG) factors into the selection and management of investments. We also had discussions with the 360 Energy team, which encourages its client companies to adapt their operations to make them more energy efficient. These businesses not only enhance their brand image with Canadian consumers, but they also reap financial rewards as well.
We exchanged ideas with Prince Edward Island Environment Minister Brad Trivers. PEI is all too mindful of the havoc that rising sea levels could wreak on its territory. The minister’s team also conveyed to us their concerns about rising P&C insurance rates. If the federal government keeps its promise, a flood risk mitigation plan mirroring the Insurance Bureau of Canada’s recommendations could soon be introduced. This plan would include flood map data gathering to illustrate the risks of flooding across the country. Also, it would make these maps available online.
We also plan to meet with Bank of Canada officials to discuss mandatory financial disclosure of climate-related risks and opportunities. As you may be aware, the Bank of England recently announced that it would make it mandatory for corporations to disclose climate risks in their financial reporting beginning in 2021. We would also like to continue our discussions with chartered professional accountants (CPAs), because actuarial expertise could help quantify and reflect risks in financial reporting.
It seems to me that measured actuarial advice based on reliable data is more important than ever in contributing to informed decision-making. Our role as actuarial advisors with regard to preparing for and mitigating risks is gaining in importance. In addition to climate change, a national pharmacare program is another issue where actuarial expertise could prove helpful if the current government decides to move forward.
Strategic priorities for the coming years
In October, members of the Board, council chairs, and Head Office staff met in Ottawa to continue working on the Institute’s draft 2020–2023 strategic plan. We were guided in our conversation by an outside moderator who helped us frame our strategic priorities in a clear, effective way. One of the tools we took away from the session was a weighting system we will apply to the objectives from each area of the organization to help prioritize resources more efficiently.
I’m looking forward to the next Board meeting in December, when we will review the plan in more detail.
Marc Tardif, FCIA, is the President of the Canadian Institute of Actuaries.