New York State Department of Financial Services Issues Guidance to Insurers Concerning Climate Change

The New York State Department of Financial Services ("DFS")--one of the primary state regulatory authorities in New York--has now issued guidance to insurers concerning managing the risks associated with climate change.  This represents a significant action by a state regulator--indeed, this is the "first U.S. financial regulator to issue a holistic set of expectations on managing the financial risks from climate change."  So, a focus on climate change has now been implemented into regulations. 

Specifically, the DFS has stated that "all New York insurers [are expected to] start integrating the consideration of the financial risks from climate change into their governance frameworks, business strategies, risk management processes and scenario analysis, and developing their approach to climate-related financial disclosure."  In particular, among other things, the DFS has said that insurers should "integrate the consideration of climate risks into its governance structure," "incorporate climate risks into [its] existing financial risk management," and "disclose its climate risks and engage with the Task Force on Climate-related Financial Disclosures and other initiatives when developing its disclosure approaches." 

Notably, the DFS connected this action with the worldwide move towards regulating financial disclosures concerning climate change, stating that "[f]inancial regulators across the globe are increasingly recognizing climate change as threat to financial stability."  DFS also noted that further guidance on this topic was expected.