I.I.I. against new SEC climate rules for US insurers

Written by Adam Cadle

20/06/2022

Creating a new layer of federal oversight would neither enhance nor standardise the climate-related disclosures US insurers make to investors, the Insurance Information Institute (I.I.I.) has said in a letter sent to the US Securities and Exchange Commission (SEC).

I.I.I.'s letter comes in response to the SEC’s request for public comment on its proposed rulemaking, The Enhancement and Standardisation of Climate-Related Disclosures for Investors.

“The US property and casualty industry supports and can play a constructive role in advancing transparency around weather- and climate-related risks,” Sean Kevelighan, CEO, I.I.I., and Dale Porfilio, chief insurance officer, I.I.I., stated.

Indeed, as financial first responders, insurers have a strong ethical and financial interest in facilitating the transition to a lower-carbon economy and in promoting resilience during that transition. However, adding a new layer of federal oversight to the existing regulatory structure would complicate insurer operations while providing little to no benefit toward reducing greenhouse gas emissions and adapting to near-term conditions and perils.”

In addition, the I.I.I. noted that the US insurance industry is regulated in more than 50 jurisdictions, receiving more governance and regulatory oversight than any other type of financial service.

“The SEC’s effort overlaps significantly with those of other entities – e.g., the National Association of Insurance Commissioners (NAIC) and the states that regulate insurance, as well as the Treasury Department’s Federal Insurance Office (FIO). Assessing Scope 3 emissions would be particularly onerous for insurers due to the fact that they cover diverse personal and commercial assets and activities, over which they have no control – further, there is currently no accepted methodology for insurers to measure their underwriting-related Scope 3 emissions, which makes the SEC’s proposed requirement premature for our industry,” Kevelighan and Porfilio added.

Scope 3 emissions are the result of activities from assets neither owned nor controlled by the reporting organisation, according to the U.S. Environmental Protection Agency (EPA).
In its letter submitted today to the SEC, I.I.I. recommended that the NAIC climate risk disclosure survey serves as the primary reporting regime for all insurers, allowing for consistent enforcement across ownership structures (public, private, and mutual) while avoiding unnecessary complexity and expenses.

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