IDOI Calls on Insurers to Disclose Climate-Related Risks

Chicago - The Illinois Department of Insurance (IDOI) will now require that insurance companies licensed to write business in the state complete an annual survey detailing the risks of climate change to their business operations, assets, and investments, as well as their plans to address those risks.

The National Association of Insurance Commissioners (NAIC)* Climate Risk and Resiliency Task Force recently updated the disclosure survey to align with the standard set by the international Task Force on Climate-Related Financial Disclosures (TCFD).

IDOI Director Dana Popish Severinghaus said the new financial reporting framework for climate risk gives regulators additional insight and will help Illinoisans make more informed choices about the companies they rely on for their insurance needs. "The devastating effects of climate change are certainly evident from floods, fires and other disasters," said IDOI Director Dana Popish Severinghaus. "Insurance companies must assess risks, manage the threat of climate change and work to build resiliency. We want them to share those best practices with the consumers who buy their insurance products to provide greater transparency."

IDOI issued Company Bulletin 2022-16 requiring all Illinois licensed insurance companies writing $100 million or more in direct premium nationwide to fill out the annual NAIC Climate Risk Disclosure Survey. Companies that have not previously submitted a survey response via a participating state will be granted an extension until August 30, 2023.

Illinois joins 15 other states/territories requesting that insurers complete the survey, including CA, CT, DE, the District of Columbia, ME, MD, MA, MN, NM, NY, OR, PA, RI, VT, and WA.

For reporting year 2020, more than 1,400 companies responded to the disclosure surveys, capturing nearly 80% of the entire U.S. insurance market. The results can be found here.

The Department is also working to address climate-related risks at the international level. This week, Director Popish Severinghaus is attending the International Association of Insurance Supervisors (IAIS) Financial Inclusion Forum- ASSAL Seminar on climate-related risks and disaster preparedness. The Department will also join the Sustainable Insurance Forum (SIF) to collaborate with other insurance supervisors and regulators on challenges facing the global insurance sector.

*NAIC is the membership organization for state insurance regulators in the U.S. and its territories.