Key figures for non-life insurance under the EU Taxonomy Regulation*

Insurance companies must also report the degree to which they are sustainable based on the EU Taxonomy for sustainable economic activities. This includes not only the proportion of taxonomy-aligned investments but also the proportion of taxonomy-aligned non-life insurance premiums. VIG insurance companies ensure compliance with the Taxonomy Regulation (EU) 2020/852 in various ways, including through Group-wide requirements and an appropriate product development process. As part of the sales process, which can also be carried out through brokers and other partners in addition to own sales workforce, VIG provides policyholders with relevant information on the coverage options. The insights gained from this process as well as the findings from market observation are incorporated into the product development process.

According to Annex II of Delegated Regulation 2021/2139, amended by the European Commission’s sustainable finance package on 27 June 2023, only 8 of the 12 non-life insurance lines of business are generally taxonomy-eligible under Solvency II, as defined in Annex I of Delegated Regulation (EU) 2015/35. These insurance lines of business include medical expense insurance, income protection insurance, workers’ compensation insurance, motor vehicle liability insurance, other motor insurance, marine, aviation and transport insurance, fire and other damage to property insurance, and assistance. Only those insurance lines of business that also include coverage for climate-related risks as defined in Appendix A of the above-mentioned Annex II are to be classified as taxonomy-eligible. The local insurance companies within the scope of the Taxonomy Regulation currently cover climate risks in the form of natural disaster cover. The natural disaster risks that are relevant under Solvency II are flooding, earthquakes, storms and hail. Since current scientific knowledge has not identified an increase in the earthquake risk as a result of climate change, earthquakes are generally not taken into account as part of this evaluation.

Coverage for the remaining natural hazard risks exists mainly in the following three insurance lines of business: other motor insurance, marine, aviation and transport insurance, and fire and other damage to property insurance. These three insurance lines of business therefore form the basis for the taxonomy-aligned proportion of the non-life insurance premiums that has to be disclosed.

Article 3 of the Taxonomy Regulation (EU) 2020/852 stipulates that taxonomy-eligible insurance lines of business must fulfil the following requirements to be classified as a taxonomy-aligned proportion of the non-life insurance premiums:

• They make a substantial contribution to the achievement of one or more environmental objectives of the Regulation.

• They do no significant harm to one or more of the environmental objectives of the Regulation (DNSH or “Do No Significant Harm” criteria).

• The minimum safeguards laid down in Article 18 of the Regulation are adhered to.

• The technical screening criteria must be met.

The technical screening criteria are used to assess whether an insurance service makes a substantial contribution to the environmental objective “climate change adaptation”. They include: “leadership role when it comes to climate risk pricing and modelling”; “product design requirements”; “innovative solutions for insurance coverage”; “data sharing” and “high standards of service after natural disasters”. All local insurance companies that provide climate risk coverage within an eligible line of business use a questionnaire to assess whether the criteria have been met. The completed questionnaires of the insurance companies are validated by VIG Holding and incorporated into the calculation for determining the taxonomy-aligned proportion of non-life insurance premiums. Compliance with the DNSH criteria is assessed in VIG on the basis of NACE codes used throughout the Group, which are a recognised classification system for economic activities. In addition, the minimum safeguards in accordance with Article 18 must be met. Compliance with minimum safeguards at VIG is ensured across multiple levels and in relevant value chain areas by means of Group-wide guidelines, a risk-based approach to counterparty screening, and a remediation process in place if a material risk is identified.

For the calculation of the taxonomy-aligned proportion of non-life insurance premiums, the written premiums are used for the numerator and denominator, as these are published in the Group Annual Report. For the calculation of the numerator, the EU Commission interpreted the information in Annex II of the Regulation in a Commission Notice (C/2024/6691) with questions and answers on the EU Taxonomy published on 8 November 2024 to the effect that only the part of the premium of a taxonomy-aligned insurance contract that relates to coverage of climate-related risks may be applied. Based on market practice and the report on the first-time publication, the premium split has been derived from the claims history excluding major loss events, reinsurance pricing information and expert estimates based on company-specific circumstances and data availability. The KPI calculation is based on data submitted by the local insurance companies in a standardised form with integrated, automated validations and then uploaded by way of a central reporting system. The consolidated key figures for the non-life insurance business are calculated on the basis of this data. The results are reconciled with the data used for the consolidated financial statements within the reporting platform. This data is internal VIG data, reinsurance data and data from external service providers, which is consistent with the data used for the consolidated financial statements. The data sources are consistent with other VIG financial reporting systems. The mandatory key figures to be disclosed for the non-life insurance business are set out in the table below.

The share of the taxonomy-eligible premium from the non-life insurance and reinsurance business was 32.5% in the reporting year (2024: 31.4%), and the share of the taxonomy-aligned premium was 5.7% (2024: 5.8%). Overall, the results are thus largely in line with the previous year, with the qualitative assessment and calculation method remained unchanged.

Weighted average value in accordance with the EU Taxonomy Regulation

In order to comply with the disclosure pursuant to Annex XI DDA (EU) 2021/2178, the following values are reported in accordance with the EU Taxonomy Regulation in relation to the turnover-based investment KPI and the CapEx-based investment KPI of the (re-)insurance undertaking and the KPI of the (re-)insurance undertaking for non-life insurance activities, weighted according to the share of the revenue of the (re-)insurance undertaking from its investment activity and the share of the revenue of the (re-)insurance undertaking from its non-life insurance activities of the total revenue of the (re-)insurance undertaking.

*Taxonomy: Disclosures pursuant to Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation)