b'Insurance Regulatory | US/NAIC | Insurance Industry Regulators Address Climate RiskICP 20 (disclosures). The Application Paper does notNAIC Initiativesestablish standards or expectations, but it doesThe NAICs Climate and Resiliency (EX) Task Force provide additional guidance to assist in implementa- (Task Force) coordinates the NAICs domestic tion and provide examples of good practice. The IAISand international efforts on climate and resiliency held a public webinar on October 26, 2020 to shareissues, including dialogue among state insurance the background of this Application paper. Theregulators, the industry, insurance consumers and consultation on the Application Paper ended onother stakeholders. The Task Force addresses January 12, 2021. national issues and provides states with information In addition, in February 2020, the SIF and the IAISand tools to support their individual markets. published an Issues Paper on the Implementation ofAt the NAIC Fall National Meeting, the Task Force the Recommendations of the Task Force on Climate- focused on the NAIC Disclosure Survey. The NAIC Related Financial Disclosures (the Issues Paper).Disclosure Survey, adopted in 2010 by the NAIC, The Task Force on Climate-Related Financialwas created to be an insurer reporting apparatus Disclosures (TCFD) was established by the Financialthat provides regulators with information regarding Stability Board in December 2015 to develop a set ofhow insurers across all lines of insurance assets voluntary, consistent disclosure recommendations formanage risks related to climate change. The eight-use by companies in providing information to inves- question survey asks insurers to provide a tors, lenders and insurance underwriters about theirdescription of how they integrate climate risks into climate-related financial risks. The TCFD published itstheir risk management, mitigation and investment recommendations in June 2017. The Issues Paperplans. Insurers are further asked to identify steps identified a number of areas where insurance supervi- taken to engage key stakeholders and policyholders sors can encourage strengthened disclosures,on the subject of climate change. Currently, six including setting regulatory expectations, supportingstates (California, Connecticut, Minnesota, New climate scenario analysis and mandating disclosures.Mexico, New York and Washington) administer the The Issues Paper provides an overview of the rel- NAIC Disclosure Survey.evance of the TCFD Guidance to insurance supervision and summarizes the results of differentAt the NAIC Fall National Meeting, the Task Force efforts to evaluate levels of TCFD Guidance aware- heard presentations from the American Academy ness and implementation within the insuranceof Actuaries and the NAIC Center for Insurance industry. The Issues Paper also offers a range ofPolicy and Research analyzing the findings from possibilities for insurance supervisory practices basedthe NAIC Disclosure Survey. These presentations on case studies in various jurisdictions.recommended that the survey incorporate certain Finally, in addition to a variety of other initiatives byadditional questions that can be answered with a international insurance regulators, the SIFs Worksimple yes or no answer. The Task Force also Programme (2021-2023) will include a variety ofcontemplated whether it is possible to combine climate-related initiatives. These initiatives maythe NAIC Disclosure Survey with the TCFD include papers, programs, case studies, webinarsGuidance. Notably, it was recommended that the and reports. The SIFs Work Programme (2021-2023)Climate Risk Disclosure Workstream contemplate will include: (i) a study of impacts of climate-relateddifferent options as it relates to the consolidation risk on the insurability of assets; (ii) a study ofand harmonization of the TCFD Guidance and the broader sustainability issues beyond climate changeNAIC Disclosure Survey. (e.g., biodiversity loss); and (iii) a study of climate risks in the actuarial processes.76 GLOBAL INSURANCE INDUSTRY|YEAR IN REVIEW 2020'