At the Fall 2023 National Meeting of the US National Association of Insurance Commissioners (“NAIC”), a number of sessions were 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. The Property and Casualty Insurance (C) Committee (the “P&C Committee”) also gave an update on its planned data call. The meetings covered the following topics.
Special (EX) Committee on Race and Insurance
At its December 2 meeting, the R&I Committee received status reports from the Property/Casualty Workstream, the Life Workstream and the Health Workstream.
- The Property/Casualty Workstream reported on its continued focus on algorithmic bias, as well as its plans to review studies and reports concerning unfair bias in underwriting and rating.
- The Life Workstream reported that, at its last meeting, it heard presentations from Colorado on its algorithmic bias law, and from Oregon on its outreach sponsorship program. According to its status report, the Life Workstream is also working on a resource guide—in cooperation with the NAIC Diversity, Equity, and Inclusion (“DEI”) Division and the State Member Diversity Leadership Forum—which will provide helpful information to insurance departments looking to improve access to and understanding of insurance by underserved communities. The resource guide is expected to be published in early 2024.
- The Health Workstream reported that it has focused on mental health coverage in recent meetings. The Health Workstream has also heard from consumer representatives in several states regarding innovative approaches for engaging communities of color on mental health topics.
In addition, the R&I Committee heard an update from the State Member Diversity Leadership Forum, which called upon state insurance regulatory authorities to share DEI best practices and generally discuss ways in which DEI matters can be addressed. In February 2023, the Member Diversity Leadership Forum launched a DEI training for regulators. This training aims to promote a basic understanding of: (1) diversity and inclusion; (2) cultural proficiency; and (3) DEI in the workplace. According to the Member Diversity Leadership Forum, more than a thousand regulators have registered for the DEI training. The R&I Committee also heard a presentation from the Insured Retirement Institute regarding its efforts to advance internal organizational DEI practices based on the R&I Committee’s recommendations for recruiting, retaining, and promoting talent that is reflective of insurers’ customers and communities.
Climate and Resiliency (EX) Task Force
At its December 3 meeting, the C&R Task Force heard a presentation on carbon capture technology from CarbFix, an Icelandic company that captures and stores carbon dioxide from basalt rock. The C&R Task Force also heard a presentation from Aon on parametric insurance solutions, which can be used to cover risks such as natural catastrophes (e.g., earthquake, tornado, wildfire, hail, hurricane) and non-physical damage business interruption. In addition, the C&R Task Force received an update that the Solvency Workstream has developed a strategy document regarding climate scenario analysis, which has been exposed for public comment until January 18, 2024.
The C&R Task Force also adopted the NAIC National Climate Resilience Strategy for Insurance, a strategy document that sets forth the following five resiliency actions as strategic goals for the NAIC in developing resilience in the insurance sector:
- Close Gaps: Identify protection gaps, develop an understanding of where protection gaps are widening, and evaluate policy options in furtherance of reducing identified protection gaps.
- Flood Insurance Blueprint: Develop new strategies, such as new products, risk assessment tools, risk communication, and risk mitigation programs, to address the protection gaps for flood insurance.
- Comprehensive Data: Reduce data gaps regarding the insurance industry and improve regulators’ understanding of how coverages are changing within and among jurisdictions.
- Risk Mitigation: Develop resilience tools to support state-level mitigation grant programs and incentive programs for pre-disaster mitigation.
- Test Scenarios: Develop new solvency tools that could include testing catastrophe models, scenario analyses, and risk mitigation factors.
The C&R Task Force adopted the document, despite concerns raised by trade associations and consumer representatives that the document had not been exposed for any public comment. Adoption was not unanimous; Indiana voted against adoption, and Iowa, Arkansas and Florida abstained. After the meeting, the document was ultimately exposed for public comments, which were due on December 20.
Property and Casualty Insurance (C) Committee
At its December 3 meeting, the P&C Committee provided an update regarding its plans for a data call to develop property market data intelligence, in order to better understand protection gaps and the availability and affordability of insurance. The P&C Committee reported that a drafting group has developed, and will continue to refine, a reporting template that requests five years worth of data at the zip code level. The P&C Committee expects that 80% of insurers that provide homeowners coverage will be subject to the data call, although the states that will be participating in the data call are still being determined.
The P&C Committee also acknowledged the recent announcement by the Federal Insurance Office (“FIO”) of a data call to assess climate-related financial risk to consumers. Recognizing that having two separate data calls covering similar information may be inefficient, the P&C Committee stated that it is working with FIO to see if there is a collaborative solution possible that would eliminate or reduce the redundancy of having two separate data calls. However, the P&C Committee asserted that, at this time, it intends to proceed with its own data call as planned.
To view additional updates from the US NAIC Fall 2023 National Meeting, visit our meeting highlights page.