Florida’s insurance commissioner and the National Association of Mutual Insurance Companies are pushing back against a plan by the U.S. Treasury to collect data from insurers on risks from climate change, calling it “federal overreach,” burdensome and unauthorized by law.
A Nov. 28 letter from Commissioner Michael Yaworsky to U.S. Treasury Secretary Janet Yellen and a Dec. 4 letter from NAMIC came a few weeks after the Treasury’s Federal Insurance Office (FIO) finalized its proposal for a nationwide data call from property insurers. The office in June also released a report on changes needed in insurance regulation and reporting on climate risks, financial analysis, insurer insolvency and other matters.
Yaworsky and NAMIC’s top attorney said the extra work for insurers in gathering the data is unnecessary. State regulators and the National Association of Insurance Commissioners (NAIC) already provide a strong framework for assessing disaster risks, he said. The NAIC last year expressed “deep concern” over the FIO’s proposal.
Industry trade associations the American Property Casualty Insurance Association (APCIA) and the Insurance Information Institute (Triple-I) have likewise blasted the FIO’s proposal.
“Because FIO insists on proceeding with the flawed proposed data call, we must state that we are concerned with federal intervention in a state insurance regulatory process, the collection methodology and usage of the data, the potential for erroneous conclusions that could ultimately harm Florida’s insurance market, and the use of Hurricane Ian impacts as a reason for the proposed data call,” Yaworsky wrote.
He argued that Florida, for example, is fully aware of weather-related losses and is the only state that provides a state-backed catastrophe fund – a type of reinsurance program – for insurers. It also is one of the few states to offer its own state-created residual insurance program (Citizens Property Insurance Corp.).
Yaworsky complained that FIO had released the requested data fields but not the methodology to be used to evaluate the data, or if the office will call on state regulators to help analyze. It all points to a move by FIO to seek further regulatory authority, he said, adding that the data call also would not allow insurers to adequately explain other cost factors, such as reinsurance, litigation and inflation.
FIO had cited the need for information on Hurricane Ian, which struck Florida in September 2022, causing an estimated $60 billion in insured losses, according to some studies. Yaworsky said it is impossible to determine the long-term impacts of the storm until all claims have been filed. Policyholders in Florida affected by Ian have two years to file a claim after a storm event.
NAMIC’s general counsel, Thomas Karol, in his Tuesday letter to the Office of Management and Budget, urged OMB to disallow the FIO’s request. Federal law requires the budget office to review such requests, but FIO’s plan does not meet statutory requirements, including coordinating with state regulators and scouring publicly available information before requesting data, Karol said.
he granularity and the scope of the proposed collection “would be on an order of magnitude that would be unexpected from an agency without regulatory authority,” and would amount to more than 287,000 data cells, Karol argued.
“No insurer maintains this data in this format or would have any reasonable business purpose to have such data in this format.”
Both Yaworsky and Karol noted that, for almost 80 years, the regulation of the insurance business has been left to the states, thanks to the federal McCarren-Ferguson Act of 1945.
“State regulators have been collecting climate related data for more than a decade and continue to refine those efforts,” added Jimi Grande, NAMIC’s vice president for federal and political affairs. “FIO piling on at a time of rising costs due to inflation and climate change only adds to the challenge of ensuring insurance affordability and availability for consumers.”
The Federal Insurance Office did not immediately respond to request for comment on the letters. It’s not certain if other states’ commissioners will join the opposition. North Carolina’s insurance commissioner declined to comment on the issue and Tennessee’s insurance office said it is studying Yaworsky’s letter.
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