Treasury's Federal Insurance Office ("FIO") joined the Network of Central Banks and Supervisors for Greening the Financial System ("NGFS"). FIO said it will issue a climate report on insurance supervision and regulation by the end of the year.
FIO plans to work with NGFS to support three priorities highlighted in FIO's Request for Information on the Insurance Sector and Climate-Related Financial Risks (issued in August 2021). As previously covered, those priorities are:
- evaluating deficiencies in insurer regulation and supervision and their effect on the stability of the U.S. financial system;
- determining the possibility of "major disruptions" with respect to the private insurance coverage of markets that are especially susceptible to the effects of climate change; and
- improving FIO's and the insurance sector's efforts to satisfy climate-related objectives.
Further, FIO signaled that it will release by year end a report on "climate-related issues or gaps in the supervision and regulation of insurers, including their potential impacts on U.S. financial stability." FIO noted that the report will contain "an analysis of climate-related disclosures for the insurance sector." The forthcoming report also "may include initial analyses of selected at-risk insurance markets."
In addition, FIO's Federal Advisory Committee on Insurance (or "FACI") created a Climate-Related Financial Risk Subcommittee.
Commentary
FIO's actions suggest a furtherance of a "whole-of-government" approach to addressing climate change financial risk. FIO's approach should appeal to those who want to take a national approach to climate change regulation, even though the insurance industry is traditionally regulated at the state level.
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