NAIC Letter to Congress Reiterates State Insurance Regulators' Multi-Faceted Approach to Climate Risk
On Sept. 16, in response to a recent congressional letter, National Association of Insurance Commissioners (NAIC) leadership laid out state insurance regulators’ longstanding and latest efforts to address climate-related financial risks, strengthen resilience, safeguard insurer solvency, and close protection gaps in a market made more challenging by rising costs and escalating perils.
“The strength of the U.S. state-based insurance regulation system to protect consumers and ensure solvent markets lies in both the flexibility of individual states to employ diverse strategies that respond directly to unique risks and market developments and the commitment of regulators to take collaborative action, gather and share data, promote best practices, and respond to national issues through the NAIC,” the letter reiterates.
For over a decade, the letter notes, state insurance regulators and the NAIC have been attuned to climate risk’s impact on property insurers. State insurance regulators are on the front lines before, during, and after a natural disaster, working on the ground and hand in hand with policyholders to explain coverage and help rebuild lives and businesses.
The state-based insurance regulatory system is uniquely positioned to adjust and respond most quickly, and regulators work with local, federal, and international counterparts to stay ahead of emerging trends, develop best practices, and empower consumers with greater awareness and mitigation tools.
The letter highlights state insurance regulators’ climate-related efforts, including market intelligence data collection, insurer disclosures, enhanced supervisory tools, creating a National Climate Resilience Strategy for Insurance to drive faster and more effective risk reduction, and establishing a Catastrophe Modeling Center of Excellence to strengthen training and risk assessment, among other steps.
NAIC leaders closed by urging members of Congress to support state insurance regulators’ work "by supporting any of the myriad mitigation and risk reduction bills pending before them.” They also advocated for enacting the Disaster Mitigation and Tax Parity Act of 2023 (S. 1953 and H.R. 4070) so consumers can use state-provided mitigation grants to fortify their homes without being taxed by the federal government, a privilege similar federal grants are already afforded.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.