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United States Treasury Begins Inquiry Into Climate Risks in Insurance

The United States Department of the Treasury has announced that the Federal Insurance Office (FIO) is requesting information and soliciting public comment on the insurance sector and climate-related financial risks.

FIO said the responses to the request for information will help it assess the implications of climate-related financial risks for the insurance sector and help FIO better understand the need for data related to these issues.

“Over the past 30 years, the incidence of natural disasters has dramatically increased and the actual and future potential cost to the economy has skyrocketed. We are now in a situation where climate change is an existential risk to our future economy and way of life,” Treasury Secretary Janet L. Yellen said. “Today’s filing in the Federal Register is an important step towards assessing climate-related financial risk in the insurance sector. Ensuring that consumers have adequate information, and that the insurance industry is appropriately assessing climate-related financial risk is essential as we work to address the climate crisis.

FIO said its efforts will focus on three initial climate-related priorities:

  1. Assessing climate-related issues or gaps in the supervision and regulation of insurers, including their potential impacts on U.S. financial stability;
  2. Assessing the potential for major disruptions of private insurance coverage in U.S. markets that are particularly vulnerable to climate change impacts, as well as facilitating mitigation and resilience for disasters; and
  3. Increasing FIO’s engagement on climate-related issues and leveraging the insurance sector’s ability to help achieve climate-related goals.

The initiative is in response to President Joe Biden’s May 2021 executive order on climate change,

There are 19 questions in the FIO’s information request. Comments must be submitted in the Federal Register within 75 days.

source; Insurance journal

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