In a strongly worded rebuke, state insurance regulators chided the Biden Administration for its attempt to gather underwriting data from property and casualty insurers regarding the impact of climate change on the homeowners insurance market.
Less concerned with the details and scope of the data being requested from insurers, the letter from the National Associate of Insurance Commissioners (NAIC) sent yesterday argues that the US Treasury Department was overstepping its authority and shunning state oversight.
“While we recognize the Treasury’s desire to better understand the impact of climate risk and weather- related exposures on the availability and affordability of the homeowners’ insurance market, we are disappointed and concerned that Treasury chose not to engage insurance regulators in a credible exercise to identify data elements gathered by either the industry or the regulatory community indicative of climate risk,” the letter sent to Treasury’s Federal Insurance Office (FIO) said. “FIO has failed to demonstrate a good faith effort to engage with state regulators and has exhibited their intention to forgo a collaborative effort to identify and collect accurate and useful data.”
The NAIC argues that the federal government’s data ask of private market insurers — and sidestepping state regulators — would result in wasted time and resources for both insurers and regulators.
“Treasury’s own proposal concedes it could take 350 hours for the industry to produce the data, nearly exceeding the total time states would be afforded in the hypothetical request, and likely underestimating the timeline needed. A number of states responded to Treasury explaining the unrealistic nature of the proposed timeline but noted that states typically would have such authority to gather the data in question. “
Last month the FIO announced that it was proposing a new data collection project from property casualty insurers to measure the “potential for major disruptions of private insurance coverage in regions of the country that are particularly vulnerable to the impacts of climate change.” Some of the data requested include historical losses and trends for homeowners policies aggregated at the ZIP Code level.
The NAIC also said that federal authorities should leverage already available data from state regulators that specifically address the climate and catastrophic data issues that the FIO is attempting to quantify.
“When reviewing the structure of the current endeavor, we believe that given the cost in dollars and human capital, the risk of misinterpretation of the data including outcomes, the lack of timing justification to ignore working with state insurance regulators, and the ultimate cost to policyholders including the potential disruption of the most robust regulatory system for insurance on a global basis, moving forward has many more substantial material costs than taking a more measured and good faith collaborative approach.”