The proposed changes, which were posted in a Federal Register notice on Oct. 18, require that property and casualty insurers provide data on climate change-related risks, in order to better prepare financial regulations for global warming.
The Federal Insurance Office, which is part of the Treasury, said that it was seeking public comment on the proposal.
The new program will collect contemporary and historical underwriting data on homeowners’ insurance using zip code-level data.
This would give the government’s insurance office “consistent, granular, and comparable insurance data needed to help assess the potential for major disruptions of private insurance coverage in regions of the country that are particularly vulnerable to the impacts of climate change.”
Treasury claims that the data would help it assess both the availability and affordability of home insurance for citizens in areas of the country vulnerable to climate change disruptions.
Climate Change Regulations And Hurricane Season Risks
Treasury Secretary Janet Yellen has been pushing financial regulators to make climate change risks a regular part of their assessments, after President Joe Biden signed an executive order in May 2021, requesting studies of climate-related financial risks.
Yellen also demanded that insurance companies increase disclosures of climate risks to investors from now on.
“Today’s action by the Federal Insurance Office is an important step in determining how Americans are being affected by the increasing costs of climate change,” Yellen said in a statement.
“The recent impacts in Florida from Hurricane Ian demonstrate the critical nature of this work and the need for an increased understanding of insurance market vulnerabilities in the United States.”
The department’s move comes a few weeks after Hurricane Ian ravaged the west coast of Florida, causing an estimated $28 billion to $47 billion dollars in damage, according to property data and analytics company CoreLogic.
Property insurers have forecast financial losses of up to billions of dollars in uninsured and insured costs due to the hurricane.
Universal Insurance Holdings, which is based in Florida, predicted a gross loss of nearly $1 billion from Hurricane Ian, which will be partially covered by its reinsurance program, according to Reuters.
The Federal Reserve announced in September that six of the largest U.S. financial services institutions would join a pilot climate risk analysis exercise, which is set to be held through 2023, similar to a program held by its European counterparts.
The Fed’s analysis will examine the impact of different hypothetical climate scenarios on the banking industry.
The Securities and Exchange Commission is also requiring that publicly traded companies on Wall Street disclose climate-related risk reports regarding their impact on greenhouse gas emissions.
Reuters contributed to this report.