California Insurance Commissioner Ricardo Lara, together with the United Nations’ Principles for Sustainable Insurance Initiative (PSI), announced the introduction of a “Sustainable Insurance Roadmap” for the state – considered America’s largest insurance market.
Lara and Butch Bacani, who leads the UN PSI, introduced the Sustainable Insurance Roadmap at the UN Climate Change Conference (COP27) in Egypt.
"California is being aggressive in protecting vulnerable communities from growing climate threats. We need the insurance sector to match our aggressiveness in protecting consumers," said Lara at the conference. "Working with the United Nations, California is making a strategic shift to put the insurance sector on a sustainable path far into the future. We cannot wait. The route to true sustainability requires reducing emissions while protecting insurance options for residents and businesses. There is no other option."
A release from the California Department of Insurance noted that Lara has already taken actions to implement the roadmap, which include:
- Enforcing the regulation that requires insurers to provide wildfire safety discounts to homes and businesses.
- Issuing a Climate Insurance Report in 2021, which made 40 recommendations to protect vulnerable communities from the impacts of climate change. The commissioner sponsored legislation proposed in the report to provide a health-based early warning system for heat waves.
- Offering insurance company fossil fuel investment analysis to the public, as well as disclosing any green investments they made.
- Leading a bipartisan national effort to endorse a strong new standard for insurance companies to report their climate-related risks, in alignment with the International Task Force on Climate-Related Financial Disclosures (TCFD).
- Creating a Climate Smart Insurance Products Database.
"California’s Sustainable Insurance Roadmap is truly pioneering and timely, particularly amid escalating climate and environmental impacts that are leading to many more lives and livelihoods lost, and homes and communities destroyed,” said Bacani. “It’s a comprehensive strategy and action plan that harnesses the insurance industry’s risk management services, insurance solutions and investments to accelerate the transition to resilient, inclusive, net-zero communities and economies, and to protect life-supporting natural ecosystems.”
Bacani added that the roadmap will help guide California’s insurance industry to be in line with the UN’s goal to cut greenhouse gas emissions in half, reverse nature loss, and attain the organization’s sustainable development goals.