EIOPA issues final advice to streamline EU Taxonomy disclosures for insurers

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EIOPA streamlines EU Taxonomy disclosures

Highlights

EIOPA recommends renaming the Underwriting KPI to Adaptation Underwriting KPI, limiting eligible business lines to eight or the three most climate-relevant, and removing gas/nuclear breakdowns.
EIOPA advises using either the Investment KPI or Underwriting KPI, depending on business relevance, instead of a weighted average for cross-sector insurance firm exposure.
European Supervisory Authorities propose full Taxonomy disclosures at parent undertaking level, with simplified reporting for material subsidiaries and elimination of Operational Expenditure KPI requirements.

Proposed changes to underwriting and reporting metrics

As reported by EIOPA, the authority has published its final advice on reviewing insurance and reinsurance disclosures under the Taxonomy Disclosures Delegated Act after a request from the European Commission.

The recommendations focus on targeted adjustments to the existing Underwriting Key Performance Indicator, or KPI, to address inconsistencies in current reporting practices. EIOPA proposes renaming the measure the Adaptation Underwriting KPI to better reflect its focus on climate change adaptation.

It also recommends a common method for calculating the numerator, including reporting only relevant contracts and covering only the share of gross written premiums, or insurance revenue, attributable to climate-related perils. For the denominator, EIOPA proposes limiting it to eight eligible lines of business to improve relevance and comparability, while also suggesting an alternative option that would let insurers report only a selection of those lines if the three most relevant lines from a climate adaptation perspective are included.

To reduce reporting complexity further, EIOPA advises removing the breakdown of gas and nuclear activities from reporting templates, saying the information is not relevant for underwriting and is generally not material for insurers' investments. The authority also says the possible introduction of a Green Insured Activities KPI, intended to measure the enabling role of underwriting through a look-through approach, should be revisited in five years.

Cross-sector implications for financial groups

Beyond the underwriting metric, EIOPA proposes changes to the combined KPI used to measure exposures to insurance undertakings. Instead of the current weighted average approach, it recommends using either the Investment KPI or the Underwriting KPI as the reference measure, depending on which business activity is more relevant.

On broader cross-sector issues, EIOPA says, together with the European Banking Authority and the European Securities and Markets Authority, that financial undertakings should not be required to introduce an Operational Expenditure KPI in Taxonomy disclosures, even on a voluntary basis.

The European Supervisory Authorities also support simplified reporting at group level. Their advice is to require full disclosures from the parent undertaking, complemented by simplified disclosures for material subsidiaries where needed, and to use the parent undertaking's KPI rather than a weighted average to measure group exposure.

Our earlier article on Mario Draghi’s warning about the macroeconomic policy dilemma outlined how keeping interest rates above growth for too long can worsen debt dynamics and raise pressure for inflationary “fiscal dominance.” It also highlighted his call for central banks to fight inflation while avoiding unnecessary damage to growth, alongside EU-level measures—such as market integration and targeted investment support—to protect productivity and resilience.

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