Climate change risk and liability report 2021
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Insurance & Reinsurance
The New York Department of Financial Services, in collaboration with 2° Investing Initiative, published a report to help insurers evaluate their transition risks from climate change and consider actions to mitigate such risks.
On June 10, 2021, the New York Department of Financial Services (“NY DFS”), in collaboration with 2° Investing Initiative, published “An Analysis of New York Domestic Insurers’ Exposure to Transition Risks and Opportunities from Climate Change” (the “Report”), which can be accessed here. The purpose of the Report is to help insurers evaluate their “transition risks” from climate change – i.e., risks arising primarily from changes in policy and regulation, low carbon technology, and changing public sentiment and patterns of demand – and consider actions to mitigate such risks. The Report follows NY DFS’s proposed Guidance for New York Domestic Insurers on Managing the Financial Risks from Climate Change, about which we previously reported here.
The Report’s findings include:
In addition, the Report outlines investment strategies that insurers can consider to mitigate their transition risks, including divestment, investment, exclusions, engagement, and setting climate-related investment conditions. The exposure and scenario analysis provided in the Report is based on the open-source Paris Agreement Capital Transition Assessment (“PACTA”) model. Insurers can use the open-source PACTA model and upload their equity and bond positions to create their own reports.
NY DFS will hold two webinars for New York domestic insurers to discuss the Report. The first is being held on June 21, 2021 and will provide an overview of the Report, and the second webinar will take place on July 12 and focus on how insurers can use their individual reports. Registration information for the webinars will be sent directly to insurers.