BOSTON—Ceres today submitted a comment letter strongly supporting California's proposal requiring the state’s largest insurers to develop and submit comprehensive plans to manage climate-related and other emerging financial risks.
The proposed rule comes as California's insurance market faces an unprecedented crisis. The January 2025 Los Angeles wildfires generated estimated insured losses between $25 billion and $40 billion, while major carriers including State Farm, Allstate, and Farmers have withdrawn from high-risk markets or non-renewed tens of thousands of policies. As a result, the California FAIR Plan, intended as a temporary insurer of last resort, has ballooned to 646,000 policies – a 123% increase since 2021.
"California deserves tremendous credit for once again leading the nation on climate risk management," said Jaclyn de Medicci Bruneau, Director of Insurance at Ceres. "This is the first state in the U.S. to propose this type of forward-looking solvency planning requirement, and it represents exactly the kind of regulatory leadership needed to address our insurance crisis. The insurers who embrace this proactive approach will be the ones who thrive in California's climate future."
Ceres' comment letter emphasizes that the regulation promises substantial benefits for market stability, consumer protection, economic resilience, and California's capacity to maintain a functional insurance market even as climate impacts intensify. Ceres recommends coordination with existing TCFD reporting cycles, development of implementation guidance for smaller carriers, public disclosure of plans to ensure transparency, and regular updates to reflect evolving climate science and best practices. Read the full comment letter here.
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About the Ceres Accelerator
The Ceres Accelerator for Sustainable Capital Markets is a center within Ceres that aims to improve the practices and policies that govern capital markets by engaging federal and state regulators, financial institutions, investors, and corporate boards to act on climate risk as a systemic financial risk. For more information, visit ceres.org/accelerator.