What the circular actually asks of insurers
FINMA Circular 2026/1 brings climate- and other nature-related financial risks into the heart of prudential supervision. It does not create a separate risk silo. Instead it asks insurers to treat nature risks as drivers that flow through existing risk types, underwriting, market, credit, liquidity, operational, and reputational, and to manage them with the same rigour applied everywhere else.
For most insurers the work is less about new science and more about evidence: showing the supervisor a documented materiality assessment, scenario analysis, and a clear line of responsibility running up to the board and the responsible actuary.
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Seven areas the supervisor will look at
The diagnostic walks through the same structure FINMA uses, so nothing is left to interpretation. Each area carries the relevant margin numbers and the evidence a reviewer would expect to see.
- Materiality assessment. Periodic identification, scenario-based analysis, documentation and categorisation by risk type, driver and time horizon.
- Governance. Defined tasks, competencies and responsibilities, with sufficient expertise across the board and control functions.
- Risk management and monitoring. Integration into the institution-wide framework, concentration risks, indicators, thresholds and limits.
- Insurance activities. Cover design, pricing, underwriting, accumulation management and claims reserving.
- Market, credit and liquidity risks. Impact on investments, defaults, liquidity needs and the timely availability of assets for claims.
- Operational, compliance and reputational risks. Business continuity, outsourcing, and alignment of public statements with obligations.
- ORSA and the responsible actuary. Capital, scenarios and risk-mitigating measures, plus the actuary's report to the executive board.
Smaller insurers are not off the hook
Particularly small insurers and reinsurers in the lighter regime fall outside the strict scope, but the circular is explicit that it serves as a guide for them, and that they are expected to take these risks into consideration. A short, proportionate self-assessment is the most efficient way to show you have done exactly that, sized to your business rather than over-engineered.
Proportionality runs through the whole circular: the depth expected scales with an institution's size, complexity and risk profile. The readiness check is built to respect that, with an option to mark questions as not applicable so the score stays fair.