U.S. Sens. Tim Scott (R-SC) and John Thune (R-SD) are among a group of lawmakers expressing concerns over efforts by the Federal Insurance Office to bring environmental, social, and governance (ESG) standards to the insurance industry.
“Across the nation, insurers work day in and day out to provide reliable coverage to the public to ensure they are protected when adverse weather events strike or accidents occur,” the senators wrote. “And, to be clear, it is in insurers’ best interest to take into account these various risks – whether it be weather risks or otherwise – that could affect their customers and integrity of their policies,” the senators wrote in a letter to U.S Treasury Secretary Janet Yellen, who oversees FIO.
In 2021, the Federal Insurance Office (FIO) issued a request for information (RFI) to solicit “public input on FIO’s future work relating to the insurance sector and climate-related financial risks.” They are seeking input on issues like gaps in the supervision and regulation of insurers and how climate change could affect the insurance market. Then, in October 2022, the FIO proposed a data collection effort to obtain certain insurance data that the FIO believes is necessary for determining what insurance coverage areas are most susceptible to climate-related risks.
“As you continue your work, it is of utmost importance that the FIO resist pressures to insert ESG policies into the heart of its work and pressure insurers and state insurance regulators into adopting tenets of the Biden administration’s unrealistic environmental agenda. Instead, we hope that the FIO will recognize that insurers and state insurance regulators are best positioned to make determinations about what risk mitigation strategies (environmental or otherwise) to implement, as they have responsibly done up to this point,” the senators wrote.
“Insurance has been and continues to be, regulated at the state level, including as it relates to what data is collected and reported by insurance companies,” Nat Wienecke, senior vice president of federal government relations and political engagement at the American Property Casualty Insurance Association (APCIA), said. “APCIA understands the potential national importance of the issue of climate and the possible impact on the financial services sector and agrees that FIO should be coordinating with the state insurance regulators when it comes to data collection from insurers, as Dodd-Frank requires.”