Sustainability risks

The UNIQA Group’s core business is to protect its customers from risks, minimise these risks through effective bundling and generate profits. To ensure this, the position of Chief Financial and Risk Officer (CFRO) was created at Group level, which is also established on the management boards at the group companies to ensure that decision-making is risk-based.

In accordance with the latest amendment to the delegated act of the Solvency II Directive (2009/138/EC), sustainability risks must be taken into account in the risk management system. This Directive entered into force on 2 August 2022. Our objective in this context is to develop an appropriate and consistent approach to considering sustainability risks, apply this approach at all times and ensure it is updated regularly. The UNIQA Group’s risk management actively takes sustainability factors and their impacts into account, and integrates them into the risk strategy and risk management process as well as into internal and external reports. Sustainability risks are treated as part of the general risk classification and are analysed for short, medium and long-term impacts, monitored and reported on as part of the risk management process. The occurrence of sustainability risks may have an actual or potential material adverse impact on the value of the Group’s assets, liabilities, financial position or reputation. The results of the sustainability risk identification and assessment process are intended to help support management decisions as part of the UNIQA Group’s product design or investment strategy.

In 2023, the UNIQA Group focused on refining its long-term climate scenarios, taking into account the experience from the previous reporting period. A quantitative approach was developed for the entire Group, analysing both the physical and transitory risks in the portfolio. The Group identified sustainability risks in the operational risk cycle at an early stage. The starting point was the implementation of upcoming changes resulting from a review of the Solvency II quantitative reporting templates. This involves reporting quantitative data on physical and transitional risks directly to the national supervisory authority and the European Insurance and Occupational Pensions Authority (EIOPA). We also improved the process for evaluating outsourcing risks throughout the Group, explicitly taking the sustainability of our outsourcing partners into account. All the relevant ESG data were integrated into our risk analysis software in 2023 to enable the daily monitoring of ESG limit utilisation rates from 2024 onwards.

The UNIQA Group’s Natural Catastrophes Competence Centre (NCCC) deals with the complexity and evolution of natural disasters, especially in connection with climate change. The NCCC plays a crucial role in analysing various risk factors for the Group. This includes understanding the risk exposure that changes over time, identifying risk concentrations and calculating the expected annual losses based on specific natural hazards and locations, both individually and on an aggregated basis. An essential part of the NCCC’s work is to analyse scenarios that realistically depict future events, including extreme and rare events, as well as the impacts of climate change under different temperature scenarios with a focus on floods, storms and hail. A key feature of the NCCC’s approach is the use of advanced stochastic models that simulate hundreds of thousands of potential natural events. These models are not only state-of-the-art, but are also regularly refined to incorporate the latest data and methods. A unique feature of the NCCC’s approach is that two thirds of these models incorporate the UNIQA Group’s own historical claims data and thus offer a tailored risk perspective that differs from the non-specific assessments of general market models. The insights gained from these stochastic natural disaster models are fundamental to the Group’s comprehensive natural disaster risk management strategy. The NCCC also plays a crucial role in the assessment of the Group’s underwriting and reinsurance strategies, in particular through the annual stress scenario tests.

Material risks related to non-financial concerns are explained in more detail in the respective sections of this report.

Solvency II
European Union Directive on publication obligations and solvency rules for the equity base of an insurance company.
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