The New York State Department of Financial Services ("DFS")--one of the primary state regulatory authorities in New York--has now issued guidance to insurers concerning managing the risks associated with climate change. This represents a significant action by a state regulator--indeed, this is the "first U.S. financial regulator to issue a holistic set of expectations on managing the financial risks from climate change." So, a focus on climate change has now been implemented into regulations.
Specifically, the DFS has stated that "all New York insurers [are expected to] start integrating the consideration of the financial risks from climate change into their governance frameworks, business strategies, risk management processes and scenario analysis, and developing their approach to climate-related financial disclosure." In particular, among other things, the DFS has said that insurers should "integrate the consideration of climate risks into its governance structure," "incorporate climate risks into [its] existing financial risk management," and "disclose its climate risks and engage with the Task Force on Climate-related Financial Disclosures and other initiatives when developing its disclosure approaches."
Notably, the DFS connected this action with the worldwide move towards regulating financial disclosures concerning climate change, stating that "[f]inancial regulators across the globe are increasingly recognizing climate change as threat to financial stability." DFS also noted that further guidance on this topic was expected.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.