SMITH, MCKEON LEGISLATION TO ASSESS IMPACTS OF CLIMATE CHANGE ON PROPERTY INSURANCE ADVANCES

The following information was released by the New Jersey State Senate, Democrats:

Aiming to better understand the current and predicted impacts of climate change on property insurance, the Senate Environment and Energy Committee advanced legislation sponsored by its Chair, Senator Bob Smith, and Senator John McKeon that would establish a task force known as the Joint Blue Ribbon Task Force on Impacts of Climate Change on Property Insurance.

"Property insurance costs are skyrocketing across the country, in large part due to the increased rate at which hurricanes, floods, and other natural disasters are hitting our communities," said Senator Smith (D-Middlesex/Somerset). "In order to better inform our response to these trends we need to have a more robust understanding of how climate change has impacted, and will continue to impact, the property insurance industry."

The bill, S-4722, would establish the aforementioned task force to assess the current and predicted impacts of climate change on residential and commercial property insurance by analyzing:

- How the state, insurance industry, and federal programs such as the National Flood Insurance Program may be subsidizing risky decision-making, keeping or putting people in harm's way;

- In which places does the price of insurance not reflect the risk a property faces;

- In which communities properties are or will be uninsurable at a reasonable cost within the next 50 years because of everyday risks such as tidal flooding or high-severity, low-frequency events such as disasters;

- How the state can ensure access to residential and commercial property insurance without subsidizing or enabling dangerous or impractical location choices;

- How changes in the insurance market and underlying physical risks, such as flooding, may impact a municipality's current affordable housing inventory and its ability to meet its affordable housing requirements;

- Given potential changes at the federal level that may impact the availability of climate data, which alternative sources of information may be available in the future and how changes in the availability of that information may impact competition among insurers and the ability for New Jersey communities to prepare and plan for longer-term insurability;

- How changes in the affordability and availability of property insurance will impact real estate value;

- The displacement and segregation impacts on communities in New Jersey, especially for those with low-and moderate-incomes; and

- Any other issues or concerns that the task force deems relevant or appropriate.

"Our climate is changing, and with that comes new risks for flooding, increasingly severe storms and hurricanes, as well as rising property insurance costs for both homeowners and businesses," said Senator McKeon (D-Essex/Passaic). "This task force will help us better understand the current and long-term trajectory of the property insurance industry, and in doing so help us better address the problems that are already arising from the increasing cost to insure property across the state and nation."

The task force would be required to submit a report on its findings and recommendations to the Governor and the Legislature no later than a year after the task force members have been appointed. It would consist of 17 members as follows:

- The Commissioners of Banking and Insurance, Community Affairs, and Environmental Protection, or their designees;

- Two members of the Senate, who shall not be of the same political party, appointed by the Senate President;

- Two members of the General Assembly, who shall not be of the same political party, appointed by the Speaker;

- Five members that are representatives from the private sector, specifically from an insurance association, an insurer, a reinsurer, a real estate representative, and a business representative, appointed by the Governor with advice and consent of the Senate;

- Three members from nonprofit entities, specifically a representative from a consumer advocacy group, planning advocacy entity, and environmental advocacy entity, appointed by the Governor with the advice and consent of the Senate; and

- Two members from academic institutions with expertise in climate change and insurance, appointed by the Governor with the advice and consent of the Senate.