Connecticut Department of Insurance Proposes Guidance on Climate Change Financial Risk

Locke Lord LLP

Following on the heels of the New York Department of Financial Services (“NYDFS”), the National Association of Insurance Commissioners (“NAIC”) and the U.S. Security and Exchange Commission (“SEC”), the Connecticut Department of Insurance on April 22, 2022 proposed guidance for domestic insurers on managing climate change financial risk.  Like the NYDFS, the NAIC and the SEC programs, the proposed guidance is based on the framework develop by the Task Force on Climate-related Financial Disclosure (“TCFD”).  The guidance calls on domestic insurers to develop a written climate risk management policy, a management system for assessing and managing climate risk, a method for incorporating climate risk into an existing enterprise Risk Management System.  Insurers that collect more than $100 million in direct premium would be required to report to the public by responding to revised NAIC survey (a summary of which is here).  Once the guidance is final, domestic insurers would be expected to develop a written policy and put in place climate risk management processes, including appropriate Board of Director structures and processes, by January 1, 2023.

The Connecticut Department of Insurance is taking comments on the proposal until May 23, 2022.  A copy of the proposed guidance along with the web site to submit comments is linked here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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