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The New York Department of Financial Services (DFS) today announced guidelines instructing insurance companies to begin considering climate change as they operate in the state. With this guidance, DFS becomes the first state regulator to explicitly direct insurance companies to manage their financial risks from climate change.
In June, Public Citizen, in partnership with 24 other organizations, submitted comments on the state's draft guidance, calling on DFS to adopt a precautionary approach, address insurers' contributions to climate-related risk, and monitor the effect insurers' risk management strategies have on communities of color and low-income communities.
Yevgeny Shrago, policy counsel for Public Citizen's climate program, issued the following statement:
"We applaud the New York Department of Financial Services' leadership in issuing a detailed supervisory framework for addressing climate-related risk. This guidance for insurers is a first for any U.S. prudential regulator, state or federal, and is a major step forward in protecting New York's insurance markets and consumers. We are especially pleased that DFS listened to community voices and has committed to monitoring and addressing threats to the availability and affordability of insurance for communities of color and low-income communities, recognizing that some risk management techniques favored by insurers may disproportionately harm these communities.
"Insurers are very vulnerable to impacts from the climate crisis, even as they enable the emissions that drive it. Today's guidance puts New York in the company of global leaders, emphasizing that prudent risk management includes reducing insured and financed fossil fuel emissions. Climate driven damage is already driving up insured losses across the United States, with corresponding upward pressure on premiums. This guidance takes a critical step toward reversing that trend by endorsing the common sense principle that reducing emissions helps reduce the damage insurers face."