On March 17, 2009, the National Association of Insurance Commissioners (“NAIC”) adopted a reporting requirement mandating that insurance companies disclose financial risks posed by climate change and the actions taken by such insurance companies to respond to such risks.As we previously reported here, the reporting requirement was first proposed in a white paper examining the potential impact of climate change on the insurance industry, which was approved by the NAIC Climate Change and Global Warming Task Force (the “Task Force”). The Task Force believes that such disclosure is important due to the potential impact of climate change on the financial solvency of insurance companies and the availability and affordability of insurance for consumers.
Insurance companies that have annual premiums of $500 million or more must complete an Insurer Climate Risk Disclosure Survey (the “Survey”) every year. The initial Survey must be filed by May 1, 2010 with insurance regulators in the insurance company’s state of domicile. The Survey requires that insurance companies report (1) alterations in risk-management and catastrophe-risk modeling in light of climate change; (2) changes in investment strategy due to climate change considerations; (3) steps being taken to engage policyholders in reducing losses caused by climate change; and (4) efforts to educate policymakers on the effects of climate change on the insurance industry.