Colorado Joins NAIC Climate Risk Disclosure Group
Earlier this month, Colorado Governor Jared Polis (D) signed S.B. 16 [1], mandating the Colorado Insurance Commissioner to adopt rules such that insurance carriers licensed in Colorado participate in the NAIC Climate Risk Disclosure Survey beginning in 2024.
The NAIC launched its Climate Risk Disclosure Survey in 2010. Initially over two dozen states participated in the survey . In 2021, fifteen states [2] participated, increasing participation from a recent low of only six participating states. Each insurance company licensed in a participating state that reports more than $100 million on its annual “Schedule T” must participate. Companies that do not meet the $100 million threshold are not obligated but may participate voluntarily. Last year, the NAIC permitted insurance carriers to provide submissions made to the International Task Force on Climate-Related Financial Disclosures (“TCFD”) in lieu of the Climate Risk Disclosure Survey. The TCFD framework is structured around four thematic areas: governance, strategy, risk management, and metrics and targets.
The impact on insurance carriers is likely to be slight as most carriers licensed in Colorado will most likely also be licensed in another participating state. More than 1,400 companies reported in 2020, capturing approximately 80% of the admitted insurance market. Unlicensed carriers, such as surplus lines carriers, are not implicated. The decision by Colorado policymakers to pass legislation rather than utilize administrative action may speak to a commitment by Colorado policymakers to meet climate goals.
[1] https://leg.colorado.gov/sites/default/files/2023a_016_signed.pdf
[2] Participating states: California, Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington https://content.naic.org/sites/default/files/inline-files/2022ProposedClimateRiskSurvey_0.pdf?msclkid=e24cf6f2b47211eca09ac1c752e22857
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* With appreciation for the contributions of our summer associate Brooke Labonski of the Brooklyn Law School Class of 2024.
