Creating a new level of federal oversight will neither increase nor standardize climate-related disclosures that US insurers make to investors, Triple-I said in a letter to the US Securities and Exchange Commission (SEC).
Triple-I’s letter responded to the SEC’s request for public comment on its proposed rulemaking, “Enhancing and Standardizing Climate-Related Disclosures for Investors.”
“The US property and casualty industry supports and can play a constructive role in advancing transparency around weather- and climate-related risks,” wrote Triple-I CEO Sean Cavellighan and Chief Insurance Officer Dale Porfilio. “Indeed, as financial first responders, insurers have a strong moral and financial interest in facilitating the transition to a lower carbon economy and promoting resilience during that transition.”
But adding a new layer of federal oversight to the existing regulatory framework would complicate insurer operations “while doing little to reduce greenhouse gas emissions and adapt to near-term conditions and risks,” the letter said.
The US The insurance industry is regulated in more than 50 jurisdictions, receiving more governance and regulatory oversight than any other type of financial service. More than 80 percent of insurance companies’ investments are in fixed income — mostly municipal — securities.
“The SEC’s efforts overlap significantly with other organizations,” Cavellighan and Porfilio wrote, referring to the National Association of Insurance Commissioners (NAIC) and states that regulate insurance, as well as the Treasury Department’s Federal Insurance Office (FIO). "Assessing Scope 3 emissions will be particularly difficult for insurers due to the fact that they cover a variety of personal and commercial assets and activities over which they have no control – in addition, there is currently no accepted methodology for insurers to measure their underwriting-related scope. . 3 emissions, which makes the SEC’s proposed requirement premature for our industry.
According to the US Environmental Protection Agency (EPA), Scope 3 emissions are the result of activities from assets that are neither owned nor controlled by the reporting organization.
Triple-I recommends that the NAIC Climate Risk Disclosure Survey serve as the primary reporting system for all insurers, allowing for consistent enforcement across ownership structures (public, private and mutual) while avoiding unnecessary complexity and expense.
"Property and casualty insurers are no strangers to climate and extreme-weather risk. We may not always talk about the issue in those terms, but our industry has long had a financial stake in the issue. Consider the fact that insured losses due to natural disasters have increased nearly 700 percent since the 1980s, and four of the five costliest natural disasters in US history have occurred in the past decade. “The industry is committed to disclosing climate-related exposures, as such information will be integral to insurers’ ability to accurately and reliably underwrite such risks and make better-informed investment decisions,” Cavellighan and Porfilio wrote.
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