Investor network Ceres has published a review of climate risk strategies employed by US insurers. The study provides insights for risk managers and regulators in their efforts to ensure a sustainable and reliable insurance sector amid increasing catastrophic events like wildfires and hurricanes. With the rising severity of natural disasters in many regions, obtaining insurance coverage has become more crucial for individuals and businesses. However, the challenge lies in securing insurance in the face of these escalating risks. Insurance regulators play a vital role in safeguarding a stable insurance market for consumers, and accessible information on how insurance companies manage these risks is essential for effective regulatory oversight. In 2022, fifteen US state insurance regulators implemented the National Association of Insurance Commissioners’ (NAIC) Climate Risk Disclosure Survey, which received responses from over 1,500 companies, representing more than 80% of the US insurance market. This year marked the first time that the survey’s questions were aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, which aim to enhance reporting on climate-related financial information. The transparency provided by these disclosures is critical in identifying actions to maintain an accessible and reliable insurance market amidst mounting climate risks. Climate-related disclosures, combined with other regulatory tools like scenario analysis and data collections, allow regulators to assess climate risks comprehensively and address protection gaps effectively. The study, a joint effort by the California Department of Insurance and Ceres, is the first–of-its kind to review and describe the contents of the TCFD-aligned Climate Risk Disclosure Survey Responses for the insurance sector. The survey’s quantitative results showed that 78% of the reports disclosed information related to six or more of the TCFD recommended disclosures. Furthermore, risk management and strategy emerged as the strongest pillars in terms of the number of reports providing detailed information.
Climate Risk Management in the U.S. Insurance Sector: Our latest report will help insurance risk managers and regulators improve their risk management practices as they take on the vital work of maintaining a sustainable insurance sector. Download now. 👇 https://t.co/1PWbhbhEvY
— Ceres (@CeresNews) July 25, 2023
