FIO Intensifies Inquiry into Climate-Related Insurance Risk

The Federal Insurance Office (FIO) recently sent a preliminary email to insurance regulators in all 50 states, asking what data they have that would show insurance coverage, liabilities, and losses for each ZIP code in their states over the past five years. The data FIO seeks will help the office assess whether insurers are refusing to cover homes and businesses in areas that are vulnerable to intensifying storms and wildfires and other effects of climate change.

The FIO was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 in the aftermath of the 2007-2008 financial crisis to monitor the availability of insurance and financial risks posed by insurance markets.

The executive order issued by President Biden in the spring of 2021 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.”

In August 2021, the FIO asked for public input on its evaluation of climate-related risks posed by insurers. This assessment 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. In keeping with our overarching opposition to the FIO’s intrusion into the existing state insurance regulatory framework, PIA submitted a comment letter refuting the RFI’s premise that the FIO is the appropriate venue for such an investigation.

The email from the FIO does not solicit the data from states; it asks what information states have available. However, FIO appears to be laying the groundwork to solicit that information in the future. As usual, one unanswered question is what the FIO plans to do with this state-specific data if and when it is collected.

PIA has a long history of supporting the state regulation of insurance and opposing federal insurance oversight. Since 2016, one of our annual top legislative priorities has been the repeal of the FIO. Our advocacy was vital to the introduction of repeal bills in both chambers of Congress earlier this year. PIA will continue to monitor the FIO’s activities in the area of climate risk as they progress.