Office of the Chief Information Officer (OCIO) 1

Federal Insurance Office (FIO)

September 2023

Report on Insurance Supervision and 

Regulation of Climate-related Risks
Key Findings

• Climate-related risks, including transition, physical, and litigation risks, present 

new and increasingly significant challenges for the insurance industry. The 

oversight of climate-related risks is therefore an emerging and increasingly 

critical topic for state insurance regulators as well as warranting careful 

monitoring by financial regulators, policymakers, and insurers.

• State insurance regulators and the NAIC are increasingly focused on 

incorporating climate-related risks into supervision and regulation, but in most 

cases their efforts remain at a preliminary stage.

• Current regulatory frameworks provide state insurance regulators with tools they 

can adapt to better consider climate-related risks, which the NAIC and some 

state insurance regulators are beginning to do. 

• All state insurance regulators should prioritize efforts to adapt their regulatory 

and supervisory tools to incorporate climate-related risks. The NAIC and state 

insurance regulators should also prioritize the creation of new and effective 

climate-related risk tools and processes for use by state insurance regulators 

through, for example, the development of scenario analysis and increased use of 

the NAIC’s Catastrophe (CAT) Modeling Center of Excellence.

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Key Findings (cont.)

• More work is needed by state and federal regulators and policymakers, as 

well as by the private sector and the climate science and research 

communities, to better understand the nature of climate-related risks for the 

insurance industry, their implications for insurance regulation and 

supervision, and for the stability of the financial system—including for real 

estate markets and the banking sector.

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Report Structure

I. Introduction and Summary of Recommendations

II. U.S. Insurance Supervision and Regulation of Climate-related Risks

A. Climate-related Risks and Insurance

B. The Roles of the States, the NAIC, and FIO

C. Analysis of Climate-related Insurance Supervision and Regulation

1. Prudential Supervision and Regulation

2. Macroprudential Supervision and Regulation

3. Market Conduct Supervision and Regulation

4. Disclosure Initiatives

III. Additional FIO Climate-related Priorities

A. Assessing Climate-related Market Disruptions

B. Analyzing the Potential Transition Exposure of Insurers

C. Reviewing Protection Gaps

D. Facilitating Disaster Mitigation and Resilience

E. Increasing Engagement

IV. Conclusion and Next Steps

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Prudential Supervision and Regulation

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• Adapt Existing Tools: Every state should adopt climate-related risk monitoring 

guidance appropriate for their markets, as some states have done and that NAIC 

should adopt, and the state insurance regulators implement, climate-related 

considerations to existing tools, such as the NAIC’s Financial Analysis Handbook, 

the Own Risk and Solvency Assessment (ORSA) Guidance Manual, and the

Financial Condition Examiners Handbook. 
Prudential Supervision and Regulation (cont.)

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• Develop New Tools and Processes: The NAIC and state insurance 

regulators should also prioritize the creation of new and effective climaterelated risk tools and processes for use by state insurance regulators 

through, for example, the development of scenario analysis and increased 

use of the NAIC’s Catastrophe (CAT) Modeling Center of Excellence.

• Data Identification: Data is very important to effectively implementing the 

recommended climate-related enhancements to insurance supervision and 

regulation. As a result, FIO recommends that state insurance regulators and 

federal authorities should continue encouraging insurers to capture more 

granular, consistent, comparable, and reliable data on climate-related risks 

and should continue identifying relevant data to better measure climaterelated risks and fill data gaps.

Examples of Insurance-Focused Climate Scenario Analysis

Jurisdiction 

(Year) Scope

Risk(s) 

Covered Primary Results for Insurers

U.S.

California 

(2018)

Insurers operating 

in California with 

more than $100M 

in premiums

Physical, 

transition

• Exposure to transition-impacted sectors

• Alignment between investee company production and that 

expected based on low-carbon pathways

• Percent of power plants in equity portfolio subject to water 

stress

• Percent of power, oil and gas, and coal assets in equity and 

fixed-income portfolios exposed to wildfire and flood risk

New York 

(2021)

Insurers domiciled 

in New York

Transition • Exposure to transition-impacted sectors

• Alignment between investee company production and that 

expected based on low-carbon pathways
Macroprudential Supervision and Regulation

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• Macroprudential Risk Assessments: The NAIC should incorporate 

climate-related risks in future Macroprudential Risk Assessments.

• Monitor Trends: State insurance regulators and the NAIC should monitor 

trends that could indicate wider issues in the insurance market, including 

hardening of the reinsurance market, growth in residual and surplus lines 

markets, and the potential climate-related risks for state guaranty funds.
Market Conduct Supervision and Regulation

• Education and Outreach: The NAIC, state insurance regulators, the 

insurance industry, FIO, and other partners should work together to increase 

consumer education and outreach regarding climate-related risks, including 

pre-disaster mitigation efforts. Public-private partnerships with the insurance 

industry can aid this educational effort.

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Disclosure Initiatives

• Improve Disclosures: The NAIC and state insurance regulators should 

support efforts to improve climate-related disclosures by the insurance 

industry and that all state insurance regulators adopt the NAIC Climate Risk 

Disclosure Survey. 

• Report Summarizing Survey Results: The NAIC should continue 

monitoring responses to its Climate Risk Disclosure Survey and publish an 

annual quantitative Report summarizing the Survey results and addressing 

how well the Survey is fulfilling its six purposes. 

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Summary of Selected Disclosure Initiatives 

Initiative Description

NAIC Adopted in 2010, and amended in 2022 to be TCFD-aligned, the NAIC Survey is a voluntary 

disclosure mechanism for participating states. For the 2021 reporting year, 965 companies submitted 

completed surveys.

NYSDFS The NYSDFS issued final guidance in 2021 for New York domestic insurers detailing its

expectations related to insurers’ management of climate-related risks, including public disclosures.

CID CID finalized a bulletin in September 2022 for Connecticut domestic insurers related to insurers’

management of climate-related risks, including public disclosures.

TCFD In 2015, the Financial Stability Board convened the TCFD to develop voluntary climate-related 

financial disclosures in order to support informed investing, lending, and insurance underwriting. 

Nearly 4,000 organizations have expressed support for the TCFD Framework and regulators in 

several jurisdictions announced TCFD-aligned reporting requirements.
Next Steps

FIO plans to advance progress on the recommendations in this Report, 

including by:

• Monitoring the climate-related work of state regulators and how their 

work addresses the issues and gaps identified in FIO’s Climate Report.

• Issuing periodic updates detailing the progress made by state 

insurance regulators and the NAIC in these areas.

• Engaging with the NAIC, state insurance regulators, and other 

domestic and international stakeholders on these issues.

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Questions?

Thank you!

Any Questions?

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