On Dec. 9, MA INS issued guidance on managing climate risks.
MA INS issued Bulletin2024-11, guidance managing financial risks for climate change.
Recommendations made pursuant to EO 604 and based on dialogue between insurance industry along with initiatives taken by NAIC and other State insurance regulations.
Managing Climate Change Risk
Take strategic approach to managing climate risks; consider risks, identify actions to manage risks proportionate to nature, scale, and complexity of insurers’ businesses.
Integrate consideration of climate risk into governance structure at group, entity level.
Board should understand climate risks, maintain oversight over management team; roles of board, management in organizational structure, define risk appetite, tolerance.
Incorporate climate risks into insurer’s existing financial risk management, including embedding climate risks in risk management framework, impact on existing risks.
Be prepared to discuss climate risks with Division at the insurer’s annual meeting.
Annual meeting topics include, strategy around investment and underwriting activity.
Appropriately disclose climate risks and engage with Task Force on Climate Related Financial Disclosures (TCFD), NAIC Climate Risk Disclosure Survey (if applicable).
Compliance with NAIC own risk and solvency assessment (ORSA) Guidance Manual.
Use scenario analysis to inform business strategies, risk assessment and identification.
Specified that scenarios should consider physical and transition risks, multiple carbon emissions and temperature pathways, and short, medium, and long-term horizons.
Implementation
Domestic insurers must implement board governance expectations and have specific plans in place to implement organizational structure expectations by Jul. 1, 2025.
May issue further guidance on implementation timing of more complex expectations, such as risk appetite and disclosure, but encouraged insurers to start working on them
