b'TABLE OF CONTENTSThe redesigned version of the survey exposed atapproach to managing climate risks that reflects its the Fall National Meeting has been revised toexposure to climate risks and the nature, scale and closely align with the TCFD model and incorporatescomplexity of its business. Further, the NYDFS insurance-specific questions. Comments were dueexpects that as an insurers expertise and on the proposed survey by January 10, 2022, andunderstanding of climate risks develops, its the Workstream intends to report its finalapproach to managing these risks will also mature. recommendation to the Task Force before the 2022Over time, an insurers analysis of climate risks and Spring National Meeting. assessment of their materiality for its business should shift from a qualitative approach to an NYDFS Issues Guidance for New Yorkapproach that is both qualitative and quantitative Domestic Insurers on Managing Climatefor risks that can be quantified. While a qualitative Change-Related Financial Risks assessment may be based on simple models and a small set of risk factors, a quantitative assessment On November 15, 2021, the NYDFS issued its Finalshould rely on increasingly sophisticated tools like Guidance for New York Domestic Insurers ongeospatial data and climate modeling and a Managing Financial Risks of Climate Change (thebroader set of relevant risk factors, including those Guidance). The Guidance states that it isdescribed in the NAIC Financial Condition intended to support New York domestic insurers inExaminers Handbook: credit, legal, liquidity, managing the financial risks from climate changesmarket, operational, pricing and underwriting, (referred to in the Guidance as climate risks) andreputational and strategic risks.expands on the NYDFS Circular Letter No. 15 from 2020. The Guidance is informed by the NYDFSsSelf-Assessment Process Addressing review of insurers enterprise risk reports, Own RiskAlternative Scenariosand Solvency Assessment (ORSA) SummaryAlso, the Guidance notes that an insurer that is Reports, NAIC Climate Risk Disclosure Surveydeveloping a climate risk approach or model may responses and other voluntarily filed disclosureneed more time to incorporate it into its risk materials, including TCFD reports, sustainabilitymanagement function or to establish an adequate reports and disclosure questionnaires. Based oncontrol environment. Such an insurer should start that review, the NYDFS noted that it found a wideby qualitatively analyzing the impact of climate range of levels of maturation and sophisticationrisks on the branded risk factors for its business among insurers in terms of understanding andlines and assets. In addition, it should assess how managing climate risks, with larger insurers typicallyits business (both assets and liabilities) will more advanced than smaller ones, which, in someperform under various scenarios, such as (1) an cases have not thought about the issue. orderly transition that phases out fossil fuel-based energy and transportation with minimum financial Taking a Proportionate Approach market disruption and a limited increase in natural As noted in the Guidance, the NYDFS expects eachdisasters, (2) a disorderly transition with a large New York domestic insurer to take a proportionatefinancial market disruption and a limited increase MAYER BROWN |87'