BOSTON — Ceres today submitted a comment letter to the California Department of Insurance in strong support of a first-of-its-kind regulation requiring the state's largest domestic insurers to develop and submit plans for managing financial risks, including those related to extreme weather.
Ceres' letter emphasizes that the proposed Long-Term Solvency Planning Regulation would strengthen California's insurance market, the fourth largest in the world, and fits squarely within a body of solvency and transition-planning frameworks already used by regulators around the world. Read the full comment letter here.
“This regulation will provide much needed visibility into how carriers are preparing for future risk,” said Steven Rothstein, Chief Program Officer at Ceres. “California's residents, communities, and economy deserve an insurance market capable of weathering the climate and technology challenges ahead; this regulation provides essential supervisory infrastructure for building that capacity.”
Already this year, record-breaking Pacific Ocean temperatures have set the stage for what could be one of California's most destructive winters on record. The National Oceanic and Atmospheric Administration's Climate Prediction Center said earlier this month there's a 97% chance El Niño will be "strong" or "very strong" between October and December. El Niño, the climate pattern marked by warmer-than-average Pacific Ocean temperatures, is associated with some of California's most destructive winter seasons, underscoring the accelerating financial and infrastructure risks that extreme weather poses to both communities and insurers.
In May, Ceres released an assessment showing that while more than 83% of assessed insurance groups now address all four Task Force for Climate-related Financial Disclosure (TCFD) reporting pillars, fewer than 11% of individual datapoints meet the bar for substantive, decision-useful reporting. It also found that forward-looking elements such as transition plans and climate targets have weakened since 2021, even as historical metrics improved.
Rothstein added, "The insurance market already leads the nation in disclosure. By requiring insurers to create long-term solvency plans, California is ensuring that insurers translate risk metrics into concrete strategies that protect the market's long-term stability."
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About Ceres
Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and resilient economy. With data-driven research and expert analysis, we inspire investors and companies to act on the world's sustainability challenges and advocate for market and policy solutions. Together, our efforts transform industries, unlock new business opportunities, and foster innovation and job growth – proving that sustainability is the bottom line. For more information, visit ceres.org.