At the Spring 2023 National Meeting of the US National Association of Insurance Commissioners (“NAIC”), a number of sessions were held focused on environmental, social and governance (“ESG”) initiatives, led by the Special (EX) Committee on Race and Insurance (the “R&I Committee”) and the Climate and Resiliency (EX) Task Force (“C&R Task Force”), both of which report to the NAIC Executive (EX) Committee. While neither the C&R Task Force nor the R&I Committee announced any major developments or exposed any substantive items for review or comment, both bodies reported on the ongoing progress of several important initiatives which they have been overseeing during the past few years.
Special (EX) Committee on Race and Insurance
At the March 23, 2023 meeting of the R&I Committee, its Property/Casualty, Life and Health workstreams provided reports, which generally focused on resources that each of these workstreams is preparing, in particular to increase access to insurance by underrepresented minorities, and efforts by these workstreams to engage with state insurance regulatory authorities and other arms of the NAIC.
In addition, the R&I Committee heard an update from the Member Diversity Leaders Forum, a forum chaired by NAIC Director of Diversity, Equity and Inclusion Evelyn Boswell, for state insurance regulatory authorities to share diversity, equity and inclusion (“DE&I") best practices and generally discuss ways in which DE&I matters can be addressed. The forum is continuing to facilitate discussions around best practices among state insurance regulatory authorities regarding their DE&I efforts.
Climate and Resiliency (EX) Task Force
At is March 24, 2023 meeting, the C&R Task Force heard presentations from Public Safety Canada (focused on Canadian flood risk and proposed insurance solutions) and the Canadian Council of Insurance Regulators (focused on consumer protection gaps and property-specific risk related to flood risk in Canada). In addition, the C&R Task Force received updates on international and federal initiatives.
On the international front, the C&R Task Force heard about current activities of the International Association of Insurance Supervisors (the “IAIS”) and the Sustainable Insurance Forum (the “SIF”) relating to climate risk. The IAIS recently held public consultations on an approach to address climate risk in addition to ongoing work on scenario analysis and climate risk data. The SIF continues to work to address access and affordability issues.
The federal update focused on three main items: (1) the National Flood Insurance Program (the “NFIP”) is set to expire on September 30, 2023, though it is possible that this program will be reauthorized by the U.S. Congress (as short-term reauthorizations have been enacted since the end of fiscal year 2017); (2) the Security and Exchange Commission’s climate risk disclosure rule is expected to be finalized in the next few months, which will be of significant interest to the insurance industry as a whole; and (3) the Biden Administration recently issued a budget proposal which contains funding for investment in clean energy and community resilience to natural disasters.
The task force also heard from the NAIC’s Catastrophe Modeling Center of Excellence, which noted that it continues to (i) develop catastrophe model training, (ii) build tools to assist regulators (including a compendium of regulatory interaction and requirements regarding catastrophe models), and (iii) engage with state insurance regulatory authorities and other organizations regarding resilience.
To view additional updates from the US NAIC Spring 2023 National Meeting, visit our meeting highlights page.