Creating a new layer of federal supervision would neither improve nor standardize the climate-related revelations that US insurance companies 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 regulation, “The Improvement and Standardization of Climate Information for Investors.”
“The US real estate and non-life insurance industry supports and can play a constructive role in promoting transparency around weather and climate-related risks,” wrote Triple-I CEO Sean Kevelighan and Insurance Director Dale Porfilio. “Insurers, in fact, have a strong ethical and economic interest in facilitating the transition to a lower-carbon economy and in promoting resilience during that transition, as the first financially accommodating one.”
However, adding a new layer of federal supervision to the existing regulatory structure would complicate the activities of insurance companies “while providing little or no benefit to reducing greenhouse gas emissions and adapting to conditions and dangers in the short term,” the letter said. .
The US insurance industry is regulated in more than 50 jurisdictions and receives more governance and regulatory oversight than any other type of financial service. More than 80 percent of insurers’ investments are in interest-bearing – mostly municipal – securities.
“The SEC’s efforts overlap significantly with those of other entities,” Kevelighan and Porfilio wrote, citing the National Association of Insurance Commissioners (NAICs) and the states that regulate insurance, as well as the Department of Finance’s Federal Insurance Office (FIO). “Assessing Scope 3 emissions would be particularly burdensome for insurers due to the fact that they cover various personal and commercial assets and activities, over which they have no control – in addition, there is currently no accepted method for insurers to measure their insurance-related extent .3 emissions, which makes the SEC’s proposed requirements too early for our industry. ”
Scope 3 emissions are the result of activities from assets that are neither owned nor controlled by the reporting organization, according to the US Environmental Protection Agency (EPA).
Triple-I recommended that the NAIC Climate Risk Survey should serve as the primary reporting system for all insurers, enabling consistent maintenance of ownership structures (public, private and reciprocal) while avoiding unnecessary complexity and costs.
“Property and non-life insurance companies are no strangers to climate and extreme weather risks. We may not have always talked about the issue in those terms, but our industry has long had an economic interest in the issue. Think about the fact that insured losses caused by natural disasters have increased by nearly 700 percent since the 1980s and that four of the five most expensive natural disasters in U.S. history have occurred in the past decade.The industry is committed to publishing climate-related exposures, as such information will be integrated into insurance companies’ ability to accurately and reliably guarantee such risks and make better informed investment decisions “, wrote Kevelighan and Porfilio.
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Broaden and deepen the conversation about climate risk and resilience
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