U.S. Treasury to work with NAIC to collect data on climate risks in insurance industry

The U.S. Department of the Treasury’s Federal Insurance Office (FIO) is collaborating with state insurance regulators and the National Association of Insurance Commissioners (NAIC) to better understand the impacts of climate-related financial risks on the insurance sector.

Through this partnership, the NAIC will be collecting, on behalf of participating state insurance regulators, ZIP Code-level data from the largest homeowners’ insurers. NAIC will share this data with FIO, which will use it to conduct a nationwide assessment of climate-related financial risks to consumers across the United States.

“Americans across the country are seeing the affordability and availability of their insurance policies decline as a result of increasingly severe climate-related disasters,” Secretary of the Treasury Janet Yellen said. “I’m pleased that the Federal Insurance Office, state insurance regulators, and the NAIC are collaborating on this important data collection. Analysis of homeowners insurance data is essential to understanding the market impacts on consumers and helping policymakers across the country respond appropriately to the risks.”

Previously, FIO proposed to collect climate-related data directly from insurance companies, as approved by the Office of Management and Budget earlier this year. However, to help mitigate reporting burdens on relevant insurance companies, FIO will pursue its efforts as part of the data collection collaboration with the NAIC rather than issue its own separate data collection at this time.

The NAIC and FIO have agreed that the NAIC will begin sending the data to FIO in June 2024, shortly after the close of the NAIC data collection. The NAIC has agreed to provide FIO with final data in late September.

FIO’s analysis of the data received will help respond to President Biden’s Executive Order on Climate-related Financial Risk. The EO called on FIO to “assess, in consultation with States, the potential for major disruptions of private insurance coverage in regions of the country particularly vulnerable to climate change impacts.”

The data analysis will also advance FIO’s statutory mandates to monitor all aspects of the insurance industry, including the extent to which underserved communities, minorities, and low- and moderate-income persons have access to affordable insurance products. FIO’s work to monitor the nationwide insurance industry complements the work of the states, which are the primary regulators of the insurance industry.

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