The Insurance Information Institute (Triple-I) has expressed its disagreement with the recent rulemaking proposal “The Enhancement and Standardisation of Climate-Related Disclosures for Investors”, made by the US Securities and Exchange Commission (SEC).
In a letter sent to the SEC, the Institute stated that the creation of a new layer of federal oversight would neither enhance nor standardise these disclosures.
Sean Kevelighan, CEO, Triple-I, and Dale Porfilio, Chief Insurance Officer, Triple-I wrote: “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.
They added: “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.”
Triple-I also recommended that the National Association of Insurance Commissioners (NAIC) climate risk disclosure survey could serve as the primary reporting regime for all insurers.
This could allow for consistent enforcement across ownership structures (public, private, and mutual) while avoiding unnecessary complexity and expenses, the letter noted.
Kevelighan and Porfilio wrote: “Property and casualty insurers are no strangers to climate and extreme-weather risk. We may not always have talked about the issue in those terms, but our industry has long had a financial stake in the issue.
“Consider the fact that insured losses caused by natural disasters have grown by nearly 700 percent since the 1980s and that four of the five costliest natural disasters in US history occurred over the past decade.
“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.”
The US insurance industry is regulated in more than 50 jurisdictions, receiving more governance and regulatory oversight than any other type of financial service. More than 80 percent of insurers’ investments are in fixed-income, mostly municipal, securities, the Triple-I noted.
“The SEC’s effort overlaps significantly with those of other entities – e.g., NAIC and the states that regulate insurance, as well as the Treasury Department’s Federal Insurance Office (FIO).
“Assessing Scope 3 emissions 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 – 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,” Kevelighan and Porfilio added.
Scope 3 emissions are the result of activities from assets neither owned nor controlled by the reporting organisation, according to the US Environmental Protection Agency (EPA).
