New insurance reporting standard aims at increasing transparency of climate-related risks
15 states covering 80% of insurance market to participate; Iowa allows confidential reporting
JOE GARDYASZ Apr 14, 2022 | 8:30 pm
2 min read time419 wordsAll Latest News, Insurance & Investments
The number of U.S. insurance companies that provide publicly available climate-related-risk reports is expected to jump to nearly 400 this year — compared with 28 last year — under a new reporting standard adopted last week by a task force of the National Association of Insurance Commissioners.
The NAIC Climate Risk & Resiliency Task Force announced Friday that it had adopted a new reporting framework aligned with the international Task Force on Climate-Related Financial Disclosures, or TCFD. Under the new standard, insurance companies required to respond to the annual NAIC Climate Risk Disclosure Survey — currently adopted by 15 states — will need to comply with TCFD reporting by November. Iowa is currently not among the 15 states that have committed to using the NAIC survey for companies licensed in their jurisdictions.
Doug Ommen, Iowa’s insurance commissioner, said in an interview with the Business Record in November that the Iowa Legislature has not passed any regulatory requirements related to addressing or reporting on climate change-related data, but if and when there are, he would follow those directives. No measures mandating climate-risk disclosures have since been enacted.
In response to the recent NAIC announcement, Chance McElhaney, communications director and legislative liaison for the Iowa Insurance Division, said that closely monitoring insurers’ short-term and long-term economic risks is an important aspect of the division’s responsibilities.
“This would include what many are describing as ‘climate risk,’” he wrote in an email. “While we may not see the issue in precisely the same way some of the other states see it, Iowa companies provide reports to us in a confidential risk disclosure document.”
The insurers in the 15 adopting states and districts — California, Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington — represent nearly 80% of the U.S. insurance market, the NAIC said in a press release.
“Our global climate crisis affects every state, requiring us to reach across partisan divides to find solutions that protect all people,” said California Insurance Commissioner Ricardo Lara, who co-chairs the NAIC Climate Risk & Resiliency Task Force with Florida Insurance Commissioner David Altmaier.
“By holding insurance companies to this global standard for climate disclosure, insurance regulators are showing the power of united leadership in our efforts to address climate change and reduce the negative impacts on insurance consumers,” Lara said.
A November 2021 Business Record article that looks at the role insurers are playing in addressing climate change risks can be found at this link.