International Climate Risk Disclosure Standard Gets US State Insurance Commissioners' Backing

The National Association of Insurance Commissioners (NAIC), a US standard-setting and regulatory support organisation, has approved the new standard for insurers operating in the US when reporting their climate-related risks.

The NAIC Climate Risk & Resiliency Task Force will adopt the new standard in agreement with the International Task Force on Climate-Related Financial Disclosures (TCFD).

TCFD helps insurance regulators and the public understand the climate-related risks in the US insurance market, as it is a global benchmark for climate risk disclosure.

NAIC's adoption of the TCFD-aligned survey standards happened during the association's spring meeting recently held in Kansas City.

The Task Force established in 2020 will coordinate the association's efforts on climate-related risk and resiliency issues domestically and internationally.

NAIC says the Task Force has devised a TCFD-aligned survey for insurers over a 14-month public participation process. The Task Force decided that introducing a TCFD-aligned disclosure framework would increase openness about how insurers managed their climate-related risks while incorporating worldwide best practices through the survey.

NAIC CEO Mike Consedine said: "Few regulators have more experience and insight into the macroeconomic effects of climate risk than insurance regulators. By modernizing the NAIC climate disclosure survey for the first time since its inception, participating members are taking a comprehensive and unified approach to protect consumers through our state-based system of insurance regulation."

NAIC said insurance regulators from the UK, France, and Switzerland would currently need TCFD-aligned reports from insurers.