ClientEarth response to Federal Insurance Office request for information on climate-related financial risks
The US Federal Insurance Office (FIO) issued a request for information to assist it with assessing climate-related issues and gaps in the supervision and regulation of insurers.
In this response, ClientEarth proposes that FIO take action in three areas:
- Fossil fuel risks: Investing in and underwriting fossil fuels can expose insurers to significant climate-related risks. FIO should assess whether existing regulation and capital regimes adequately reflect those risks.
- Transition plans: The insurance sector can help achieve national emissions reduction goals by adopting transition plans that actively seek to reduce the emissions associated with underwriting and investment portfolios. FIO should encourage insurers to set science-based emissions reductions targets and credible transition plans, including through guidance on common standards.
- Impact underwriting: FIO should assess the role of risk-based pricing and contractual terms in contributing to climate change adaptation and mitigation.