NAIC adopts standard for reporting climate risks

A bipartisan group of state insurance regulators on Friday adopted a new standard for insurers to report their climate-related risks in line with the Task Force on Climate-Related Financial Disclosures.

The National Association of Insurance Commissioners announced the move Friday at its spring meeting in Kansas City, Missouri.

The TCFD standard is an international benchmark for climate risk disclosure and will help insurance regulators and the public better understand the climate-related risks to the U.S. insurance market, the NAIC said in a statement.

Under the standard, insurers required to respond to the NAIC’s annual climate risk disclosure survey will need to comply with TCFD reporting by November.

Currently, 14 states and the District of Columbia have made the NAIC survey – a voluntary tool for state insurance regulators – a requirement for insurers licensed in their jurisdictions representing nearly 80 percent of the U.S. insurance market.

The states are California, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.

Some 28 insurers already provided TCFD-compliant reports in 2021, according to the NAIC.

"By holding insurance companies to this global standard for 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 consumers," California Insurance Commissioner Ricardo Lara said in the statement.

The American Property Casualty Insurance Association had previously raised concerns about the proposed revised requirements of the NAIC survey.

David Snyder, vice president, policy, research and international for APCIA, said Friday the insurance industry trade group welcomed the latest changes made by the NAIC, including language on materiality, flexibility, confidentiality and the delayed reporting date to Nov. 30 for 2022.

“We continue to believe that additional time should be provided for companies that are filing their climate reports for the first time, but the flexibility provided is much appreciated,” Mr. Snyder said.

A number of states don’t support the additional requirements, he said. “We hope for more discussion on that,” he said.