The New York State Department of Financial Services ("DFS")--one of the primary state regulatory authorities in New York--has now issued guidance to insurers concerning managing the risks associated with climate change. This represents a significant action by a state regulator--indeed, this is the "first U.S. financial regulator to issue a holistic set of expectations on managing the financial risks from climate change." So, a focus on climate change has now been implemented into regulations.
Specifically, the DFS has stated that "all New York insurers [are expected to] start integrating the consideration of the financial risks from climate change into their governance frameworks, business strategies, risk management processes and scenario analysis, and developing their approach to climate-related financial disclosure." In particular, among other things, the DFS has said that insurers should "integrate the consideration of climate risks into its governance structure," "incorporate climate risks into [its] existing financial risk management," and "disclose its climate risks and engage with the Task Force on Climate-related Financial Disclosures and other initiatives when developing its disclosure approaches."
Notably, the DFS connected this action with the worldwide move towards regulating financial disclosures concerning climate change, stating that "[f]inancial regulators across the globe are increasingly recognizing climate change as threat to financial stability." DFS also noted that further guidance on this topic was expected.
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