WASHINGTON, D.C. — At a meeting of the Financial Stability Oversight Council (FSOC) today, U.S. Treasury Secretary Janet Yellen called for financial regulators to review shifts in insurance price and availability. In statements before FSOC as part of the release of its Climate-related Financial Risk: 2023 Staff Progress Report,Yellen stated she welcomed a further review of the risks posed by the interconnectedness of real estate insurance and the broader financial system. According to Yellen, only 60% of the $165 billion in total economic losses from climate-related disasters in 2022 were covered by insurance. Carly Fabian, insurance policy advocate at Public Citizen, issued the following statement:
“Recent insurer withdrawals represent a devastating indication of the national scale of the climate-driven insurance crisis. The crisis will not be limited by state lines, and state regulators have taken far too little sufficient action. As insurers face higher losses and pass the costs to consumers across the country by raising premiums and withdrawing coverage, regulators must recognize that climate-related risk is financial risk and Americans are already paying the price.
“As insurers engage in a short-sighted approach to climate-related risks—insuring and investing in fossil fuels, the very sector responsible for destroying lives, homes, and insurance markets—the U.S. Treasury Department must monitor disruptions in insurance access and the potential for systemic risks to the economy and drive FSOC to mitigate those risks. To address gaps in existing data, Treasury’s Federal Insurance Office should move forward quickly with its proposal to collect national data on climate impacts on insurance markets.”
Public Citizen, Sierra Club, Americans for Financial Reform Education Fund, and The Sunrise Project yesterday called on FSOC to consider financial risks posed by nonbanks, including insurance companies due to climate change in their review of two rule proposals.
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