The National Association of Insurance Commissioners (NAIC) announced at its spring meeting that a bipartisan group of state insurance regulators has adopted a new standard for insurance companies to report their climate-related risks, in alignment with the international Task Force on Climate-Related Financial Disclosures (TCFD).
The bipartisan group is led by Insurance Commissioners Ricardo Lara of California and David Altmaier of Florida, who are co-chairs of the NAIC Climate Risk & Resiliency Task Force, which was established in 2020 to coordinate the NAIC’s domestic and international efforts on climate-related risk and resiliency issues.
“Our global climate crisis affects every state, requiring us to reach across partisan divides to find solutions that protect all people,” said Commissioner Lara. “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.”
The Task Force developed the new TCFD-aligned survey over a 14-month public participation process led by Oregon Insurance Commissioner Andrew Stolfi and Rhode Island Superintendent Elizabeth Dwyer in coordination with Commissioners Lara and Altmaier and marks the first update to the NAIC’s Climate Risk Disclosure Survey approach since it was created in 2010. The Task Force determined that implementing a TCFD-aligned disclosure framework would enhance transparency about how insurance companies manage climate-related risks and opportunities and incorporate international best practices, among other benefits.
Under the new standard, insurance companies required to respond to the annual NAIC Climate Risk Disclosure Survey will need to comply with TCFD reporting by November 2022. Fifteen states—including California, Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington—have committed to utilize the NAIC survey in 2022 for insurance companies licensed in their jurisdictions, representing nearly 80 percent of the U.S. insurance market. While 28 insurance companies provided TCFD-compliant reports in 2021, this list is expected to grow to nearly 400 insurance companies and groups.
Source: National Association of Insurance Commissioners