New York Insurance Watchdog Can’t Rest After Important First Step on Climate Risk
ALBANY, NY – Public Citizen and 24 organizations with New York State ties have submitted a comment to the New York Department of Financial Services (DFS) in response to its proposed guidance to insurers on managing financial risks from the climate crisis.
The agency’s release of the proposed guidance marks the first time any U.S. regulator, federal or state, has publicly laid out its expectation for how financial institutions should address the risks of climate change. After recognizing this milestone, the comment also calls on the regulator to go further and take an active role in directing insurers’ responses, in part by adding a focus on reducing insurers’ contributions to climate change. The comment also cautions DFS to carefully scrutinize how insurer decisions on managing climate risk will affect consumer markets, especially on low-income communities and communities of color.
The U.S. insurance industry has recently come under fire for failing to act on climate change. This guidance will impact insurers supervised by New York’s Department of Financial Services, including AIG, Chubb and more. Indigenous leaders and activists targeted AIG and Chubb during a mid-June week of action which called out insurers for providing coverage to the Trans Mountain tar sands pipeline. While Chubb has taken minor steps to limit its coal underwriting in the name of climate action, activists have called on the company to adopt stronger policies across its fossil fuel coverage. AIG is one of the few global insurers with zero policies to restrict underwriting or investing in fossil fuels. AIG has also stated that it’s not very concerned about paying for worsening climate damage because it can just raise prices or drop coverage, both of which would leave consumers without protection and disproportionately harm vulnerable communities.
Pete Sikora, Climate & Inequality Campaigns Director at New York Communities for Change, released the following statement:
“Insurers run their businesses today in a manner that worsens climate change, which especially harms vulnerable communities here in New York. Right now, New York-based AIG invests $26.8 billion in fossil fuels and provides coverage to pipelines. Other New York based insurers also invest in and insure climate-destroying fossil fuels. The Department of Financial Services should do much more to make insurers stop torching the planet, to New Yorkers great detriment.”
Yevgeny Shrago, Policy Counsel at Public Citizen’s Climate Program, released the following statement:
“State and federal regulators should follow New York’s example and start regulating how insurers, banks and other financial institutions deal with the risks of climate change. But still, DFS can’t rest on its laurels. The agency needs to recognize that risks from climate change can’t be managed or hedged with business as usual strategies. Bolder action is needed to stop insurers from sowing the seeds of their own destruction, like limiting the coverage they can provide to fossil fuel projects like mines, wells and pipelines. Meaningful limits on insurers is the only path available to protect New York’s communities and economy from a 2008-level financial crisis.”