As reported here, earlier this year, the Biden administration assigned new tasks to the Federal Insurance Office (FIO) via an Executive Order on Climate-Related Financial Risk that tasked both the FIO and the Financial Stability Oversight Council (FSOC), another Dodd-Frank creation, with assessing “climate-related issues or gaps in the supervision and regulation of insurers.”
On August 31, the FIO asked for public input on its evaluation of climate-related risks psed by insurers. Its evaluation is part of a broader Biden administration effort to mitigate hazards presented by the financial sector as well as a broader effort to address climate-related risks in various economic sectors.
The FIO will focus on three priorities: Assessing climate-related gaps in the supervision and regulation of insurers; assessing the potential for major disruptions of private insurance coverage in U.S. markets; and helping the sector achieve climate-related goals. The Treasury Department, which oversees the FIO, has said it hopes the responses will help to ascertain the availability of and need for reliable data on the intersection of climate change and insurance.
The FIO’s new examination of the relationship between climate risk and the insurance industry is yet another example of its ever-expanding portfolio of oversight responsibilities. If an inquiry into the potential effects of climate change on the stability of the insurance industry is warranted, it should be undertaken at the state level by state insurance regulators, who are tasked with regulating the business of insurance, and not the federal government.