Page 26 - Insurance Times February 2022

WHY CLIMATE

CHANGE IS DRIVING

MAJOR CHANGES TO

INSURANCE

SUPERVISION AND

REGULATIONS IN THE

US?

W ith 50 states and as many insurance weather events will lead to loan defaults and rising insurance

regulators in the US, the existence of a
claims. The task on hand for the FIO, therefore, is to identify
Federal Insurance Office (FIO) almost
and assess climate-related issues or gaps in the supervision
sounds implausible. But thanks to climate
on financial stability.
change, an assertive US Department of the Treasury is and regulation of insurers, including their potential impact
nudging the FIO into action.
The Dodd-Frank Act grants the FIO certain financial stability,
Moody's believes the credit impact of "a delayed and monitoring and international responsibilities. The FIO advises
disorderly carbon transition" is the greatest threat to the Secretary of the Treasury on major domestic and
financial firms, as the increasing frequency of catastrophic prudential international insurance policy issues, and it serves
as a non-voting member on the Financial Stability Oversight
About the author Council (FSOC). Among other things, it is also specifically
authorised to monitor all aspects of the insurance profession,
Praveen Gupta including identifying issues or gaps in the regulation of
Praveen Gupta is a thinker, thought leader insurers that could contribute to a systemic crisis in the
and a proven professional with profound insurance profession or the US financial system.
understanding of the insurance industry.
He pursues his passion of exploring, President Joe Biden's 20 May 2021 Executive Order on
learning and sharing from the exciting inter-sections be- Climate-Related Financial Risk emphasises the important role
tween Climate Crisis, Diversity, Governance, Risk and Tech. that the insurance sector can play in combatting climate
He essays his passionate views through his blog; change. It instructs the Secretary of the Treasury to task the
www.thediversityblog.com.
FIO "to assess climate-related issues or gaps in the
26 The Insurance Times, February 2022