Triple-I opposes SEC climate disclosure proposal

Triple-I opposes SEC climate disclosure proposal | Insurance Business America

Triple-I opposes SEC climate disclosure proposal

Introducing a new layer of federal oversight would neither enhance nor standardize the climate-related disclosures US insurers make to their investors, the Insurance Information Institute (Triple-I ) said Friday in a letter to the US Securities and Exchange Commission.

Triple-I sent the letter in response to the SEC’s request for public comment on its proposed rulemaking for enhancing and standardizing climate-related disclosures for investors.

“The US property and casualty industry supports and can play a constructive role in advancing transparency around weather- and climate-related risks,” wrote Sean Kevelighan, Triple-I CEO, and Dale Porfilio, chief insurance officer. “Indeed, as financial first responders, insurers have a strong ethical and financial interest in facilitating the transition to a lower-carbon economy and in promoting resilience during that transition. However, adding a new layer of federal oversight to the existing regulatory structure would complicate insurer operations while providing little to no benefit toward reducing greenhouse gas emissions and adapting to near-term conditions and perils.”

The US insurance industry is regulated in more than 50 jurisdictions and receives more governance and regulatory oversight than any other type of financial service, Triple-I said. More than 80% of insurers’ investments are in fixed-income – mostly municipal – securities.

“The SEC’s effort overlaps significantly with those of other entities – e.g., the National Association of Insurance Commissioners (NAIC) and the states that regulate insurance, as well as the Treasury Department’s Federal Insurance Office (FIO),” Kevelighan and Porfilio wrote. “Assessing Scope 3 emissions would be particularly onerous for insurers due to the fact that they cover diverse personal and commercial assets and activities, over which they have no control – further, there is currently no accepted methodology for insurers to measure their underwriting-related Scope 3 emissions, which makes the SEC’s proposed requirement premature for our industry.”

Scope 3 emissions are the result of activities from assets that are neither owned nor controlled by the reporting organization, according to the Environmental Protection Agency.

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In its letter to the SEC, Triple-I recommended that the NAIC climate risk disclosure survey serve as the primary reporting regime for all insurers, which would allow for consistent enforcement across ownership structures – public, private and mutual – while avoiding what the organization said was “unnecessary complexity and expenses.”

“Property and casualty insurers are no strangers to climate and extreme-weather risk,” Kevelighan and Porfilio wrote. “We may not always have talked about the issue in those terms, but our industry has long had a financial stake in the issue. Consider the fact that insured losses caused by natural disasters have grown by nearly 700% since the 1980s, and that four of the five costliest natural disasters in US history occurred over the past decade. The industry is committed to disclosure of climate-related exposures, as such information will be integral to insurers’ ability to accurately and reliably underwrite such risks and make better-informed investment decisions.”