State insurance regulators should prioritize efforts to adapt their regulatory and supervisory tools to incorporate climate-related risks, the Treasury Department’s Federal Insurance Office said yesterday in a new report on insurance regulation and climate risk. The document is part of a larger push by the Biden administration to address what it says are the financial risks posed by climate change. Among its findings, the report said that more work is needed to understand the nature of climate risks for the insurance industry and broader financial system, “including for housing markets and the banking sector.”
The report makes 20 recommendations for climate-related insurance supervision and regulation, including calling on the National Association of Insurance Commissioners and state regulators to adopt new requirements concerning reporting and analysis of climate risks. It also calls on regulators to prioritize the creation of risk tools such as scenario analysis and recommends they support efforts to improve climate-related disclosures by the insurance industry.