California launches Sustainable Insurance Roadmap
A new Sustainable Insurance Roadmap that looks to tackle climate change has been announced by California’s insurance commissioner and the United Nations’ Principles for Sustainable Insurance Initiative (PSI).
The roadmap is to be concentrated in the state and, according to the California Department of Insurance, will mark ‘a strategic shift’ in combating the consequences of climate change. It will also work towards reducing emissions and increasing community resilience while aiding recovery from climate-linked disaster.
Commissioner Lara and Butch Bacani, who leads the PSI at the United Nations, introduced the Sustainable Insurance Roadmap during the UN Climate Change Conference in Egypt (COP27), highlighting the four interlocking goals of reducing emissions, accelerating community mitigation, keeping insurance affordable and available for vulnerable communities, and closing protection gaps between insured and uninsured losses.
Lara said: “California is being aggressive in protecting vulnerable communities from growing climate threats. We need the insurance sector to match our aggressiveness in protecting consumers. Working with the United Nations, California is making a strategic shift to put the insurance sector on a sustainable path far into the future. We cannot wait. The route to true sustainability requires reducing emissions while protecting insurance options for residents and businesses. There is no other option.”
The Sustainable Insurance Roadmap envisions climate actions by insurance companies, including rewarding resilience, increasing green investments, underwriting more climate-friendly technologies, and protecting nature-based solutions such as healthy wetlands and forests. Commissioner Lara has already taken actions to implement the Sustainable Insurance Roadmap, including:
- Enforcing the first-in-the-nation regulation requiring insurance companies to provide wildfire safety discounts to homes and businesses, in order to increase community resilience and prevent future losses.
- Issuing the first-ever Climate Insurance Report in 2021, which made 40 recommendations to protect vulnerable communities from the costs of climate change. Commissioner Lara sponsored legislation first proposed in the report that make California the first state to provide a health-based early warning system for heat waves (AB 2238, Chapter 264, Statutes of 2022) and creating climate resilience districts that can support nature-based solutions (SB 852, Chapter 266, Statutes of 2022).
- Providing the public with analysis and disclosure on insurance company fossil fuel investments and green investments, in order to increase transparency for consumers and measure progress.
- Leading a successful bipartisan national effort to endorse a strong new standard for insurance companies to report their climate-related risks, in alignment with the international Task Force on Climate-Related Financial Disclosures (TCFD).
- Creating a Climate Smart Insurance Products Database, with insurance supporting the expansion of green technology by businesses and consumers.
Source: Reinsurance News, https://www.reinsurancene.ws/california-launches-sustainable-insurance-roadmap/