Treasury Dept. to Ask Insurers for Data on Climate Risks to Measure Coverage Affordability

Last year, the Financial Stability Oversight Council — a group of regulators charged with assessing risks to stability after the financial crisis — deemed climate change an “emerging and increasing threat.” The federal government is working on mitigating those risks, but it has run into difficulties.

In July, the Federal Insurance Office asked states to supply information about local underwriting trends to determine changes to the affordability and availability of homeowners’ insurance, but it became apparent states didn’t have the information, Treasury officials said. They expect the new proposal to face some resistance but said that they tried to minimize the burden on insurers by limiting the information to the last five years and citing the recent damage from Hurricane Ian, which landed in Florida and South Carolina in September, as proof this move is warranted.

On Tuesday the insurer Swiss Re told investors it expects to receive $1.3 billion in claims related to Hurricane Ian, leading to a $500 million quarterly loss. Fifteen weather and climate disasters with losses exceeding $1 billion have hit the United States in 2022, according to the National Centers for Environmental Information, and these figures do not necessarily reflect the full extent of losses because of incomplete data. Hurricane Ian may become one of the costliest of these events, and Florida is one of the places that is becoming less insurable.

Though experts say pricing climate risk will only get harder as extreme weather events become more frequent, the Treasury Department says that getting granular information from insurers will help the federal government better manage climate risks.

Article source: https://www.nytimes.com/2022/10/18/business/dealbook/treasury-insurance-climate-risk.html