This report summarizes responses from insurance companies to a survey on climate change risks developed by the National Association of Insurance Commissioners (NAIC). In 2013, insurance regulators in California, Connecticut, Minnesota, New York and Washington required insurers writing in excess of $100 million in direct written premiums, and licensed to operate in any of the five states, to disclose their climate-related risks using this survey.
The aim of the survey, and Ceres’ analysis of the responses, is to provide regulators, insurers, investors and other stakeholders with substantive information about the risks insurers face from climate change and the steps insurers are taking—or are not taking—to respond to those risks. Because virtually every large insurer operates in at least one of the mandatory climate risk disclosure states, this analysis effectively opens a window into the entire industry. The report distills key findings and industry trends, and includes company specific scores based on disclosed actions taken to manage climate risks. It also offers recommendations for insurers and regulators to improve the insurance sectors’ overall management of climate change risks.
The survey generated 330 distinct insurer responses after duplicates were removed, compared to 184 insurer responses in a similar Ceres report issued in 2012. 1 The 330 companies represent about 87 percent of the U.S. insurance market by direct premiums written. Ceres’ analysis assesses insurer responses against five core themes that are aligned with the NAIC’s Climate Risk Disclosure Survey questions: 1) the governance structures companies have in place to address climate risk; 2) the climate risk management programs companies have instituted across their enterprises; 3) how insurers are using computer modeling to manage their climate risks; 4) how insurers are engaging with stakeholders on the topic of climate risk; and 5) how companies are measuring and reducing greenhouse gas (GHG) emissions. Ceres also ranked companies on the overall quality of their responses to the eight survey questions.
In order to provide standardized, useful comparisons between companies, Ceres assigned a point value to each question and sub-question from the survey. 2 To simplify our report findings, Ceres developed a four-tier rating system. Using a 100-point scale, “Leading” companies received 75 points or higher, “Developing” companies received between 50 to 75 points, “Beginning” companies received between 25 and 50 points, and “Minimal” companies received less than 25 points. Company specific ratings across all six themes can be found in Appendix A