NAIC Adopts Climate Risk Disclosure Requirement for Insurers
The National Association of Insurance Commissioners ("NAIC") recently adopted a requirement that insurance companies prepare an annual disclosure identifying their financial exposure from climate change. Insurers will be required to report on (1) how they are altering their risk-management and catastrophe-risk modeling in light of the challenges posed by climate change, (2) steps they are taking to engage and educate policymakers and policyholders on the risks of climate change, and (3) any changes in investment strategy due to climate change considerations.
The NAIC requirement still needs to be adopted state-by-state, but is expected to be implemented swiftly. The required "Insurer Climate Risk Disclosure Survey" would become an annual reporting requirement for insurers beginning in May of 2010 as adopted by the NAIC.