The Treasury Department on Tuesday said it intends to gather data from insurers in order to assess climate risk, a first-of-its-kind push that adds to the Biden administration’s efforts to use financial regulation to counter global warming.
The Treasury’s Federal Insurance Office is seeking public input on a proposal to collect data from property and casualty insurers. The department said it wants to gather current and historical underwriting data on homeowners’ insurance.
The data collection would be aggregated at the ZIP code level but would not include the collection of data on individual homeowners, according to a news release.
The FIO said the move will allow the agency to collect “consistent, granular, and comparable insurance data” so that it can assess the potential for climate change-related risk in parts of the country that are the most vulnerable.
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“Today’s action by the Federal Insurance Office is an important step in determining how Americans are being affected by the increasing costs of climate change,” said Treasury Secretary Janet Yellen. “The recent impacts in Florida from Hurricane Ian demonstrate the critical nature of this work and the need for an increased understanding of insurance market vulnerabilities in the United States.”
“FIO’s data collection will add to the work of regulators and policymakers across the Administration to assess climate-related risks to the financial system, the U.S. economy, and the American people,” she added.
Should it move forward, this would be the first time the FIO has tried to collect data since it was given the authority to do so under the Dodd-Frank Act more than 20 years ago. The Tuesday news triggers a two-month comment period during which individuals and groups can weigh in on the matter.
The proposal is a further indication that agencies under the Biden administration are trying to use rule-making to get involved in mitigating climate risks.
Last month, the Federal Reserve announced that six of the country’s biggest banks will participate in a pilot climate risk analysis exercise set to begin next year and conclude by the end of 2023. Scenario analysis will be used to examine the resiliency of financial institutions under different hypothetical climate scenarios, similar to an effort already being undertaken by European regulators.
The Securities and Exchange Commission also voted to propose a rule compelling companies to disclose climate-related risks. The proposal says companies must report direct and indirect greenhouse gas emissions, with an outside party then auditing those reports.
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While self-reporting of climate data is already commonplace with many companies, the climate disclosure rule, if approved, would push the SEC a step further by mandating the practice and could be seen as a form of indirect pressure on fossil fuel companies.
The SEC additionally proposed increasing disclosure requirements for environmental, social, and governance investment funds and broadening SEC rules governing names that suggest funds are ESG-oriented.
