Industry Letter

Date: Thursday, May 9, 2024

To: New York State Domestic Insurers

Subject: DFS Update Report: Analysis of New York Insurers’ NAIC Climate Risk Disclosure Survey Responses

Today, the New York State Department of Financial Services (DFS) published a new report, "Update on New York Domestic Insurers’ Management of the Financial Risks from Climate Change - An Analysis of NAIC Climate Risk Disclosure Survey Responses and Other Reporting." As part of its ongoing efforts to evaluate and support its regulated insurers’ progress in assessing, managing, and disclosing their climate-related financial risks, DFS conducted this review and analysis of insurers' responses to the National Association of Insurance Commissioners’ Climate Risk Disclosure Survey ("Survey") for reporting year 2021. The report covers 83 insurance groups and 13 unaffiliated insurers with countrywide premiums ranging from $100 million to almost $200 billion.

This latest report follows the NAIC’s revision of the Survey questions to align with the widely adopted Task Force for Climate-Related Financial Disclosure (“TCFD”) standards, and focuses on the following TCFD pillars: governance, risk management, strategy, and metrics and targets.

Consistent with its previous reports analyzing Survey responses for reporting years 2019 and 2020, DFS has rated responses according to insurers’ level of progress in implementing the Guidance for New York Domestic Insurers on Managing the Financial Risks from Climate Change ("Guidance") issued in November 2021.

DFS will continue to leverage the annual Survey results to: (i) assess insurers’ overall status progress in identifying, assessing, and managing climate risks in keeping with Guidance expectations, and, as appropriate, develop additional direction on implementation; (ii) identify additional good practices that can be shared with the industry; and (iii) support risk-based supervision by identifying insurers that appear to lag, generally or in a specific area, compared to their peers, and by engaging in bilateral discussions to understand their challenges and highlight areas for improvement.