APCIA Expresses Concerns over New NAIC Climate Risk Disclosure Mandate

Risk Assessment

March 29, 2022

Risk Assessment

The American Property Casualty Insurance Association (APCIA) has voiced concerns over the National Association of Insurance Commissioners (NAIC) recently approved climate risk disclosure mandate.

The climate risk disclosure mandate won approval earlier this month from the NAIC's Climate and Resiliency (EX) Task Force and next will be considered by the NAIC Executive and Plenary committees at the NAIC's 2022 Spring National Meeting April 4–8 in Kansas City, Missouri.

"While the proposal has been greatly improved, we continue to ask for modifications even as the program moves forward," the APCIA said in a statement.

Among the concerns, the APCIA said, was that new proposed survey requirements, which have a short time frame for implementation, will place a burden on hundreds of insurers, particularly small-to-midsized companies that have previously been filing responses to eight survey questions.

"For these companies, there simply may not be enough time or they may not have the resources to provide useful narrative responses as currently proposed, considering the internal governance process that will be needed for thorough responses," David Snyder, vice president, international, and counsel for APCIA, said in the statement.

The APCIA has sought to have any new climate risk disclosure requirements phased in beginning in the 2023 reporting year. That timing would allow companies time to provide better and more meaningful responses, the industry group said.

In addition, a more phased-in approach would allow more careful consideration of which matters are best discussed with regulators in confidence and which are appropriate for public disclosure, the APCIA said. The group expressed particular concern over disclosures that must predict future developments or a company's future competitive strategy.

"Insurers are leaders in the effort to enhance natural catastrophe mitigation and reduce losses from natural catastrophes," Mr. Snyder said. "We believe the resources of insurers and regulators are best dedicated to that critically important effort."

March 29, 2022