Treasury hopes to tackle climate insurance risks
The Treasury Department just launched a new effort to grapple with how climate change is affecting the insurance market and, by extension, financial markets more broadly.
Driving the news: Treasury, via the Federal Insurance Office, is soliciting information on topics like data needed to measure and assess the sector's climate-related risk exposures and "climate-related issues or gaps in the supervision and regulation of insurers."
- More broadly, the office is looking to assess the potential for "major disruptions" of private insurance in markets especially vulnerable to climate change.
- The Wall Street Journal points out that the effort will affect FIO's work with states, which are the primary insurance regulators.
What they're saying: "The increased frequency and severity of climate-related disasters, as well as the magnitude of associated insured losses, highlight the significance of these climate-related financial risks and the role of insurers in responding to them," the notice states.
Threat level: Treasury notes that some consumers are finding it increasingly tough to find affordable property insurance in some markets.
- The department is also emphasizing insurers' wider role in financial markets, noting that life insurers are among the largest investors in U.S. capital markets.
- "As owners of significant amounts of assets, insurers could be vulnerable to potential decreases in asset values arising from the transition towards a low-carbon economy," Treasury said.