Combatting Climate Change: The Push For More Robust Disclosures From Insurers – Insurance Laws and Products

As heat waves intensify, wildfires rage, droughts languish and storms intensify, the climate crisis has become plainly visible. 1 Against this backdrop, investors are now urging insurers to provide more robust climate disclosures as part of broader environmental, social and governance (ESG) efforts, and regulators are taking action, with a SEC final ruling on a pending proposal requiring publicly registered insurers to provide additional information on direct and indirect greenhouse gas emissions they expect to produce in late 2022 or early 2023 a unique position to consider adopting more sustainable business practices. For example, in California, the nation’s largest property-casualty insurance market, insurers invested nearly $540 billion in fossil-fuel assets in 2019. 2 As climate change and climate catastrophes lead to record losses and amid a growing sense of social awareness in our culture, 3 Shareholders recognize a potential need for a change in the way the industry does business and an interest in making sure insurers don’t cover pollutants (like coal and tar sands).

Insurance is essential for consumers and businesses, but industry faces increasing risk as it continues to invest in fossil fuel and other greenhouse gas-emitting industries as these industries contribute to the rapidly warming climate. These industries are also expected to decline as the country transitions from carbon use to alternative energy sources, and these assets could be stranded. 4 Insurers are also exposed to additional risks in property and casualty insurance as they face increasing pressure from extreme weather events exacerbated by climate change. 5 For example, in 2020, the United States experienced 22 extreme weather and climate-related disasters, each causing over $1 billion in damage.
6 The pursuit of greater disclosure is therefore framed as a means to manage these risks and hold insurers accountable for addressing climate change through their business practices.

Measures by the supervisory authority

The push for more information from insurers and greater accountability for their role in addressing climate change has followed the significant development of current and proposed regulations related to climate risks in the insurance industry.

Leading the way at the state level was California Insurance Commissioner Dave Jones, from 2011 to 2019, the first financial regulator to assess insurance companies’ reserve portfolios for climate-related risks. 7 As commissioner, Jones urged insurers to voluntarily divest their holdings in thermal coal based on economic indicators that projected a decline. He asked that insurers in the state of California disclose investments in oil, gas, coal or utilities that are more than 50 percent from those sources. 8th The New York Department of Financial Services (NYDFS) followed suit and became the first insurance regulator to issue guidelines on climate-related risks for insurers based in New York state. The NYDFS issued guidance on the impact of climate change on financial risk on November 15, 2021 to provide insurers with direction for developing a strategic roadmap to address climate-related risk. The initial steps of the guide focused on leading the board and establishing a strong organizational structure. Compliance with the first steps of the guidelines was expected by August 15, 2022, with full implementation required within three to five years.

At the national level, in April 2022, the National Association of Insurance Commissioners (NAIC) revised its Climate Risk Disclosure Survey (the NAIC Survey) to adopt a new climate risk disclosure standard to be agreed with the Task Force on Climate-Related Financial Disclosures (Task Force on Climate-Related Financial Disclosures). TCFD) Disclosure Framework. 10 This bipartisan group of state insurance regulators was led in this effort by current insurance commissioners Ricardo Lara of California and David Altmaier of Florida. Insurers with premiums in excess of $100 million in 14 states (California, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington) and the District of Columbia are committed to completing the NAIC survey and submitting a TCFD compliant report by November 30, 2022. The new standard aims to expand the list of insurance companies providing TCFD-compliant reports to approximately 400 insurers, compared to the 28 TCFD-compliant reports provided by insurers in 2021. 11 The revised NAIC survey is structured around the four TCFD-focused areas: Governance, Strategy, Risk Management, and Metrics/Objectives. In addition, the NAIC survey includes optional closed-ended questions that individual states may include to support narrative responses to the four TCFD-focused areas.

Following NAIC’s revisions to the NAIC survey, California Insurance Commissioner Ricardo Lara said, “Our global climate crisis affects every state and requires that we walk across partisan divides to find solutions that protect all people. By holding insurance companies to this global standard of 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 customers.” 12


1. See United Nations, Intergovernmental Panel on Climate Change, “Code Red for Humanity”, August 2021,

2nd Report 2019, S&P Global for the Cal. Department of Insurance, of Insurance Company Investments -CDI-Final-Reportv2.pdf.

3. Hurricane Ida and other severe storms, including tornadoes and late-year storms, that struck the United States in 2021 resulted in the third costliest year on record for insurers. Aon 2021 Weather, Climate and Catastrophe Insight Report,,-Catastrophe-Related-Economic-Losses-Reported-in- 2021, from 297 billion in 2020.


5. pages of the balance sheet.

6. 2020-62038969.




10 See

11. See


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