Triple-I Comments on SEC Investor Climate-Related Disclosure Proposal

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June 23, 2022 |

Half of earth´s horizon has blue sky white clouds and green fields while the other half has dark orange sky dry parched land

In a letter to the US Securities and Exchange Commission (SEC), the Insurance Information Institute (Triple-I) says that creating a new layer of federal oversight would neither enhance nor standardize the climate-related disclosures US insurers make to investors.

The Triple-I's letter was in response to the SEC's request for public comment on its proposed rulemaking, "The Enhancement and Standardization of Climate-Related Disclosures for Investors."

"The US property and casualty industry supports and can play a constructive role in advancing transparency around weather- and climate-related risks. Indeed, as financial first responders, insurers have a strong ethical and financial interest in facilitating the transition to a lower-carbon economy and in promoting resilience during that transition," Sean Kevelighan, CEO of the Triple-I, and Dale Porfilio, the organization's chief insurance officer, wrote in the letter. "However, adding a new layer of federal oversight to the existing regulatory structure would complicate insurer operations while providing little to no benefit toward reducing greenhouse gas emissions and adapting to near-term conditions and perils."

The US insurance industry is regulated in more than 50 jurisdictions, receiving more governance and regulatory oversight than any other type of financial service, a Triple-I statement said, adding that more than 80 percent of insurers' investments are in fixed-income instruments, mostly municipal securities.

The Triple-I letter argued that the SEC's effort would overlap significantly with those of entities like the National Association of Insurance Commissioners (NAIC) and state insurance regulators, as well as the Treasury Department's Federal Insurance Office.

Assessing Scope 3 emissions—those resulting from activities of assets neither owned nor controlled by the reporting organization—would be "particularly onerous for insurers due to the fact that they cover diverse personal and commercial assets and activities, over which they have no control," the letter said. "Further, there is currently no accepted methodology for insurers to measure their underwriting-related Scope 3 emissions, which makes the SEC's proposed requirement premature for our industry."

The Triple-I letter suggested that the NAIC's climate risk disclosure survey serve as the primary reporting mechanism for all insurers, allowing for consistent enforcement across ownership structures while avoiding unnecessary complexity and costs.

The letter noted the property-casualty insurance industry's close connection to climate and extreme-weather risk. "The industry is committed to disclosure of climate-related exposures, as such information will be integral to insurers' ability to accurately and reliably underwrite such risks and make better-informed investment decisions," Mr. Kevelighan and Mr. Porfilio wrote.

June 23, 2022