California Insurance Commissioner Dave Jones on Wednesday announced that the California Department of Insurance has joined with Washington and New York to require insurers to disclose the effects of climate change on their business.
The states will require all companies that write in excess of $300 million in direct written premium to respond to the Climate Risk Survey adopted in 2009 by the National Association of Insurance Commissioners.
California was the only state to administer the survey in 2009 and 2010, and has now joined with the other two states in order to continue the survey.
“The survey data will provide regulators with substantive information about the risks to insurers posed by climate change,” Jones said in a statement. “The survey will also explore the actions insurers are taking in response to their understanding of climate change risks.”
“Climate change will have major implications for the insurance industry, yet few insurance companies are identifying their potential exposure and strategies for dealing with it,” said Andrew Logan, insurance program director at Ceres, an investor group that has been active in pushing for stronger climate disclosure by the industry. “This weak disclosure means that investors, regulators and consumers have been flying blind without a solid sense of whether the industry is taking the steps necessary to understand and respond to this profound issue. The leadership demonstrated by Commissioner Jones and his colleagues today will go a long way toward closing this information gap.”
Last year set a record for catastrophe losses for insurers, a large portion of which were due to severe storms and flooding. U.S. insurers saw claims from nearly 2,000 tornadoes, plus thousands of hail and high wind events, according to the statement. If the spring 2011 tornado and storm season were to be considered a single event, it would have cost $21.3 billion in insured losses, making it the fourth-costliest insured event in U.S. history, according to industry figures.
“This multi-state effort will not only seek to strengthen this survey, but also to ensure the results of the survey continue to be made public,” Jones said. “The result should be that insurers can implement best practices, and members of the public can study the impact on consumers.”
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