Travelers has requested that the US Securities and Exchange Commission (SEC) allow it to exclude a shareholder proposal on climate risk from its proxy materials.
The proposal, submitted by environmental advocacy group As You Sow, calls for the insurer to provide additional reporting on how climate-related pricing and coverage decisions could affect the sustainability of its homeowners insurance business.
The shareholder group’s request asks Travelers to disclose its expectations regarding policy uninsurability due to climate risk, as well as the anticipated impact of nonrenewals and rate adjustments on profitability.
The proposal also seeks an assessment of how climate-related municipal bond risks and housing market fluctuations could affect the company’s financial position.
Travelers has said in its 2023 annual report that climate change is a long-term issue expected to evolve over decades, but that most policies renew annually, allowing it to adjust rates and underwriting criteria accordingly.
As You Sow, however, argues that the company has not explained how it plans to retain enough homeowners policies to maintain profitability amid these adjustments, particularly as more policies shift to state-backed insurers of last resort.
Travelers was the ninth-largest provider of homeowners multiperil insurance in California in 2023, with a 4.04% market share based on direct premiums written. The company has preliminarily estimated $1.7 billion in pretax catastrophe losses from the January wildfires in Los Angeles.
Following the fires, a Travelers executive noted that the company had avoided covering the highest-risk properties and that some policies did not include wildfire coverage.
Insurers in the United States have faced evolving requirements regarding climate-related disclosures, with California implementing specific mandates for insurance companies operating within the state.
Initially adopted in 2010, the National Association of Insurance Commissioners (NAIC) climate risk disclosure survey was updated in 2022 to align with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
Insurers with direct written premiums exceeding $100 million are required to annually disclose information across four key areas: governance, risk management, strategy, and metrics and targets.
Meanwhile, effective from Jan. 1, 2026, California’s Senate Bill 261 mandates that companies with over $500 million in revenue doing business in California report on climate-related financial risks and the measures they are taking to address these risks.
Notably, however, insurance companies are exempt from SB 261 and are instead subject to the disclosure standards adopted by the NAIC.
In its letter to the SEC, Travelers argues that it already provides detailed climate-risk reporting in its annual reports, covering its investments in technology and workforce initiatives aimed at managing weather- and climate-related risks.
It contends that the shareholder proposal seeks disclosure requirements that exceed established climate-risk reporting frameworks, such as the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
The company further stated that it is not aware of any insurance carriers providing the level of disclosure requested by As You Sow. It argues that the proposal would override management’s discretion in assessing and reporting climate risks, describing the requested reporting as overly detailed and prescriptive.
Travelers has asked the SEC staff to confirm that it will not recommend enforcement action if the company omits the proposal from proxy materials for its annual shareholders’ meeting.
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