Treasury Department proposes climate data collection rule for insurers
The Treasury Department has announced that it is proposing a new rule that would collect weather risk data from home insurance companies.
The proposed changes, which were published in a Federal Register notice on Oct. 18, require P&C insurers to provide climate change risk data, to better prepare financial regulations for global warming.
The Federal Insurance Office, part of the Treasury, said it was seeking public comment on the proposal.
The new program will collect contemporary and historical home insurance underwriting data using postal code level data.
This would give the government’s insurance office “consistent, granular and comparable insurance data needed to help assess the potential for major disruptions to private insurance coverage in areas of the country that are particularly vulnerable to the impacts of change. climatic”.
The Treasury says the data would help it assess both the availability and affordability of home insurance for citizens in parts of the country vulnerable to disruptions from climate change.
Climate Change Regulations and Hurricane Season Risks
Treasury Secretary Janet Yellen has pushed financial regulators to regularly incorporate climate change risks into their assessments, after President Joe Biden signed an executive order in May 2021 calling for studies of climate-related financial risks .
Yellen also demanded that insurance companies now increase disclosure of climate risks to investors.
“Today’s action by the Federal Insurance Office is an important step in determining how Americans are affected by the growing costs of climate change,” Yellen said in a statement.
“The recent impacts of Hurricane Ian in Florida demonstrate the critical nature of this work and the need for a better understanding of vulnerabilities in the U.S. insurance market.”
The department’s decision comes weeks after Hurricane Ian tore through Florida’s west coast, causing damage estimated between $28 billion and $47 billion, according to proprietary data and analytics firm CoreLogic.
Property insurers have projected financial losses of up to billions of dollars in uninsured and insured costs due to the hurricane.
Universal Insurance Holdings, which is based in Florida, predicted a gross loss of nearly $1 billion from Hurricane Ian, which will be partially covered by its reinsurance program, according to Reuters.
The Federal Reserve announced in September that six of the largest U.S. financial services institutions would join a pilot climate risk analysis exercise, set to run through 2023, similar to a program organized by its European counterparts.
The Fed’s analysis will examine the impact of different hypothetical climate scenarios on the banking sector.
The Securities and Exchange Commission also requires companies listed on Wall Street to disclose climate risk reports regarding their impact on greenhouse gas emissions.
Reuters contributed to this report.