US state insurance commissioners endorse international climate risk disclosure standard

US state insurance commissioners endorse international climate risk disclosure standard | Insurance Business America

US state insurance commissioners endorse international climate risk disclosure standard

The National Association of Insurance Commissioners (NAIC) has agreed to adopt a new standard for insurers operating in the US to use when reporting their climate-related risks.

The NAIC Climate Risk & Resiliency Task Force, led by co-chairs California Insurance Commissioner Ricardo Lara and Florida Insurance Commissioner David Altmaier, is adopting the new standard in alignment with the international Task Force on Climate-Related Financial Disclosures (TCFD). According to a release, the TCFD standard is a global benchmark for climate risk disclosure, and will help both insurance regulators and the public to better understand the climate-related risks to the US insurance market.

NAIC’s adoption of the TCFD-aligned survey standards was announced during the association’s recent spring meeting in Kansas City, MO.

The Task Force was established in 2020 to coordinate the association’s domestic and international efforts on climate-related risk and resiliency issues. According to NAIC, the Task Force developed a TCFD-aligned survey for insurers over a 14-month public participation process, which was led by Oregon Insurance Commissioner Andrew Stolfi and Rhode Island Superintendent Elizabeth Dwyer.

Read more: Delaware joins NAIC’s climate risk disclosure survey

Through the survey, the Task Force determined that implementing a TCFD-aligned disclosure framework would enhance transparency around how insurers managed their climate-related risks, while incorporating international best practices.

"Our global climate crisis affects every state, requiring us to reach across partisan divides to find solutions that protect all people," said Ricardo 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 NAIC's action shows that our system of state-based insurance regulation remains strong and flexible in responding to changing conditions in our markets and our world," added David Altmaier. "Thank you to my fellow regulators for your commitment to work together to protect consumers."

"Few regulators have more experience and insight into the macroeconomic effects of climate risk than insurance regulators," said NAIC CEO Mike Consedine. "By modernizing the NAIC climate disclosure survey for the first time since its inception, participating members are taking a comprehensive and unified approach to protecting consumers through our state-based system of insurance regulation."

NAIC noted in a release that insurance regulators from France, Switzerland, and the United Kingdom currently require TCFD-aligned reports from insurers.