The National Association of Insurance Commissioners (NAIC) has agreed to adopt a new standard for reporting climate-related risks by insurers operating in the United States.
The NAIC Climate Risk & Resiliency Task Force is adopting the new standard in accordance with the international Task Force on Climate-Related Financial Disclosures, which is led by co-chairs California Insurance Commissioner Ricardo Lara and Florida Insurance Commissioner David Altmaier (TCFD). According to a press release, the TCFD standard is a global norm for climate risk disclosure that will aid both insurance regulators and the general public in better understanding the climate-related risks facing the US insurance sector.
The NAIC announced its endorsement of the TCFD-aligned survey criteria during its recent spring meeting in Kansas City, MO.
The Task Force was formed in 2020 to help the organisation coordinate its local and international work on climate-related risk and resiliency problems. The Task Force, directed by Oregon Insurance Commissioner Andrew Stolfi and Rhode Island Superintendent Elizabeth Dwyer, developed a TCFD-aligned survey for insurers over a 14-month public engagement process, according to NAIC.
The Task Force decided that introducing a TCFD-aligned disclosure framework would increase transparency around how insurers manage climate-related risks while also incorporating international best practises based on the results of the survey.
“Our global climate catastrophe affects every state, necessitating collaboration across partisan lines to create solutions that safeguard everyone,” Ricardo Lara stated. “By holding insurance corporations to this worldwide standard for climate disclosure, insurance regulators are demonstrating the potential of collective leadership in our efforts to combat climate change and mitigate its harmful effects on insurance consumers.”
“The NAIC’s move demonstrates that our state-based insurance regulatory system is robust and adaptable in response to changing market and global situations,” David Altmaier remarked. “I appreciate my fellow regulators’ resolve to collaborate in order to protect consumers.”
Insurance regulators, according to NAIC CEO Mike Consedine, “have greater knowledge and understanding into the macroeconomic effects of climate risk than few other authorities.” “Participating members are taking a comprehensive and united approach to protecting consumers through our state-based system of insurance regulation by upgrading the NAIC climate disclosure survey for the first time since its creation.”
Insurance authorities in France, Switzerland, and the United Kingdom currently require TCFD-aligned reports from insurers, according to the NAIC.