California publishes roadmap for sustainable insurance

The California Commissioner for Insurance and the United Nations Principles for Sustainable Insurance Initiative (PSI) have announced a new roadmap for sustainable insurance designed to tackle climate change.

The roadmap is intended to be state-focused and, according to the California Department of Insurance, “mark a strategic shift” in combating the effects of climate change. It will also work to reduce emissions and increase community resilience while supporting recovery from climate-related disasters.

Commissioner Lara and Butch Bacani, who lead PSI at the United Nations, presented the Sustainable Insurance Roadmap during the UN Climate Change Conference in Egypt (COP27), highlighting the four interlocking goals: reducing emissions, accelerating climate action in the community , affordability and availability of insurance for vulnerable communities, and closing protection gaps between insured and uninsured losses.

Lara said, ‚ÄúCalifornia is taking aggressive action to protect vulnerable communities from growing climate threats. We need the insurance sector to keep up with our aggressiveness in protecting consumers. In partnership with the United Nations, California is making a strategic shift to put the insurance sector on a sustainable path far into the future. We can’t wait. The path to true sustainability requires reducing emissions while protecting insurance options for residents and businesses. There’s no other possibility.”

The Sustainable Insurance Roadmap calls for climate action by insurance companies, including rewarding resilience, increasing green investments, underwriting more climate-friendly technologies, and protecting nature-based solutions like healthy wetlands and forests. Commissioner Lara has already taken action to implement the Sustainable Insurance Roadmap, including:

Stratumn, from SIA Partners

  • Enforced the nation’s first regulation requiring insurance companies to give homes and businesses discounts for wildfire safety to increase community resilience and prevent future losses.
  • Release of the first-ever climate insurance report in 2021, containing 40 recommendations to protect vulnerable communities from the costs of climate change. Commissioner Lara, first in the report, sponsored proposed legislation that would make California the first state to provide a health-based early warning system for heat waves (AB 2238, Chapter 264, 2022 statutes) and create climate-resilient counties that can support nature-based solutions (SB 852, Chapter 266, Statute 2022).
  • Provide analysis and disclosures to the public on fossil fuel investments and green investments by insurance companies to increase transparency for consumers and measure progress.
  • Leading a successful bipartisan national effort to adopt a strong new standard for insurance companies to report on their climate-related risks, in line with the international Task Force on Climate-Related Financial Disclosures (TCFD).
  • Creation of a database for climate-friendly insurance products, whereby insurance companies support the spread of green technologies by companies and consumers.
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