The U.S. Treasury Department’s Federal Insurance Office (FIO) is preparing to proceed with a revised data collection that will specifically target property insurers regarding climate risks. The data collection announcement and solicitation of public input come despite ongoing concerns that the data collection will be overly burdensome to insurers, will ignore the existing state insurance regulatory infrastructure, and will result in the collection of data that is poorly suited to enabling the federal government to better understand the complex issue of climate risk.
The proposal, which is one element of the Biden administration’s strategy to address climate-related financial risks, will be disseminated to insurers with at least a one-percent stake in the U.S. homeowners’ insurance market, as determined by each carrier’s 2022 percentage of direct written premium. Each in-scope insurer will be instructed to divulge detailed ZIP code-level data for the insurance years from 2017 to 2022. If approved, the data call will collect loss- and claims-related data, along with premium-related data and policy information.
A year after laying out its initial plan for collecting climate risk data from insurers, and following considerable feedback from industry, the FIO’s revised plan purports to mitigate the burden on insurers, particularly for smaller in-scope carriers. However, the data call remains both overly intrusive and poorly designed for nationwide analysis at a ZIP code level. Public engagement during the comment period will be crucial in shaping a balanced regulatory approach that will inform national resilience activities without unfairly constraining the insurance industry.
The FIO’s current plan is being made public for a 30-day public comment period, known as a Notice of Proposed Rulemaking, or NPRM, which is expected to be followed by the Treasury Department’s submission of the plan to the Office of Management and Budget for its approval. If approved, in-scope insurers can expect the data collection to be implemented in the first half of 2024.
Going forward, PIA will continue to argue that the most appropriate administrators of climate risk data collections are state insurance departments or the National Association of Insurance Commissioners (NAIC). States discuss and share information on best practices and emerging issues in numerous existing venues, so the FIO, and the federal government more broadly, are not needed to facilitate either industry data collection or regulatory information-sharing. This data collection will only serve to gratuitously expand the FIO portfolio.
PIA has a long history of supporting the state regulation of insurance and opposing federal insurance oversight. In November 2016, PIA became the first national insurance association to publicly call for the repeal of the FIO, and its repeal or substantive reform remains a PIA top priority. Since then, we continue to highlight our concerns with the FIO’s growing authority, which becomes more duplicative and superfluous as it increases.
Indeed, PIA helped develop and supports bills currently pending in Congress to repeal the FIO and to substantially limit its power. Later this week, the House Financial Services Committee subcommittee on housing and insurance will hold a hearing highlighting both PIA-supported bills to reform or repeal the FIO. In advance of the hearing, PIA submitted testimony for the record reiterating our support for those bills.
As the FIO continues its unwarranted pursuit of overly burdensome and detailed insurer data, PIA will continue to monitor the FIO’s activities and provide comments on today’s NPRM. We will also continue to encourage Congress to pass a bill to either repeal or substantially reform the FIO.