State insurance regulators released a plan Friday for a coordinated national effort to strengthen property insurance markets and fortify their states against severe weather and climate-related disasters.
The National Climate Resiliency Strategy for Insurance focuses on strengthening communities against wildfires, floods and storms and giving regulators better data and information to address coverage gaps.
Written by the National Association of Insurance Commissioners, the plan involves stepping up data collection, developing a “flood insurance blueprint”, utilizing a recently established catastrophe modeling center to assess risks, promoting pre-disaster mitigation programs, increasing public awareness of risks and enhancing solvency analysis.
“The goal of the strategy is to drive faster and more effective risk reduction by state insurance regulators to ensure that insurance continues to be available and reliable as communities across our nation face climate risk,” Andrew Mais, Connecticut insurance commissioner and NAIC president, said during a media briefing.
Many states are ravaged by severe climate incidents. The NAIC plan represents an initial attempt at a collective effort to address insurance problems, the organization’s leaders said.
“This is the first time we’re going to have a real coordinated response before the disaster happens, which is critical,” said California Insurance Commissioner Ricardo Lara, who co-chairs the NAIC Climate and Resiliency Task Force. “[States] are all in this together, and we all need to succeed. The challenges we face today are unprecedented and national in scope, requiring a unified approach by our state regulators, who are the true experts in our individual markets.”
Obtaining and analyzing data to identify areas where insurance is limited due to the impact of climate disasters is central to the plan. The NAIC recently launched a property-insurance data collection effort to gather information – including premiums, policies, claims, losses, limits, deductibles, non-renewals and coverage types – at the zip-code level from more than 400 insurers.
Under the plan, the NAIC will establish a Climate Risk Dashboard to target priority areas for insurance availability.
“This strategy will help close protection gaps and make our communities more resilient,” said Lori Wing-Heier, Alaska insurance director and co-chair of the NAIC task force.
The NAIC strategy does not mandate any actions by insurers, Wing-Heier said. But if it leads to changes that strengthen resistance to severe weather, it could help increase coverage.
“We are hoping that if we can address things from zoning laws to construction to hardening programs.. that in itself will draw insurance companies back to places that are having troubles with losing insurance, be it Florida, be it the Gulf Coast, be it California and even up here in Alaska, where we are seeing insurers cut back on their underwriting,” Wing-Heier said.
Just as the weather can always change and present new challenges, the NAIC strategy will be protean as well.
“The document will live and evolve, as will our approach,” Mais said.
