U.S. Treasury Proposes New Climate Data Collection Rule for Insurers

The US Treasury announced on Tuesday that it would propose a new rule to collect data on climate-related risks from property and casualty insurers, one of the first concrete steps in a new push to strengthen financial regulation to help combat global warming.

Source: Reuters | Published on October 18, 2022

Climate change

In a Federal Register notice, the Treasury's Federal Insurance Office stated that it was seeking public comment on the proposal, which would collect current and historical underwriting data on homeowners' insurance.

The zip-code data would provide the insurance office with "consistent, granular, and comparable insurance data required to help assess the potential for major disruptions in private insurance coverage in regions of the country that are particularly vulnerable to the effects of climate change."

The decision comes less than three weeks after Hurricane Ian wreaked havoc on Fort Myers Beach and other parts of Florida's southwest coast, causing billions of dollars in both uninsured and insured damage and forcing some insurers to forecast financial losses.

U.S. Treasury Secretary Janet Yellen has urged financial regulators in the United States to make assessing climate change risks a routine part of their work, including a demand that companies increase disclosures of such risks to investors.

Treasury stated that the proposed data collection rule would assist the Federal Insurance Office in determining both the availability and affordability of insurance for millions of Americans.

The Federal Insurance Office's action today is an important step in determining how Americans are affected by the rising costs of climate change," Yellen said in a statement. "The recent impacts of Hurricane Ian in Florida highlight the critical nature of this work and the need for a better understanding of insurance market vulnerabilities in the United States."