Ceres, a US-based non-profit organisation that works with investors, companies and policymakers to advance sustainable business practices and improve the management of climate-related financial risks, has voiced its support for a proposed California regulation that would require the state’s largest domestic insurers to prepare long-term solvency plans addressing financial risks, including those linked to extreme weather.
In a comment letter submitted to the California Department of Insurance, Ceres said the proposed Long-Term Solvency Planning Regulation would strengthen oversight of the state’s insurance sector while bringing it into line with solvency and transition-planning approaches already adopted by regulators in other parts of the world.
The organisation believes the measure would reinforce the resilience of California’s insurance market, which it describes as the fourth largest globally.
Commenting on the proposal, Steven Rothstein, Chief Programme Officer at Ceres, said the regulation would provide “much needed visibility into how carriers are preparing for future risk.” He added that California’s residents, communities and businesses needed “an insurance market capable of weathering the climate and technology challenges ahead,” describing the proposed framework as an important step towards building that resilience.
Ceres said the proposal comes at a time when climate-related risks facing California continue to grow. The organisation pointed to unusually warm Pacific Ocean temperatures recorded this year, which have increased the likelihood of a particularly severe winter season. It also referenced forecasts from the US National Oceanic and Atmospheric Administration’s Climate Prediction Center indicating a 97% probability of a “strong” or “very strong” El Niño event between October and December.
According to Ceres, such weather patterns have historically been associated with some of California’s most destructive winters, highlighting the increasing financial risks posed to insurers alongside the wider impacts on communities and infrastructure.
The organisation also cited findings from its own climate disclosure assessment, published in May, which examined insurers’ reporting against the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
While Ceres found that more than 83% of assessed insurance groups now reported against all four TCFD pillars, fewer than 11% of individual disclosure data points were considered sufficiently detailed to support informed decision-making. Its assessment also found that forward-looking reporting, including transition plans and climate targets, had weakened since 2021 despite improvements in historical climate-related metrics.
Rothstein said California’s insurance sector was already a national leader in climate-related disclosure, but argued that greater emphasis should now be placed on translating those disclosures into practical planning. “By requiring insurers to create long-term solvency plans,” he said, “California is ensuring that insurers translate risk metrics into concrete strategies that protect the market’s long-term stability.”
