iThe New York State Department of Financial Services ("NYDFS") issued final guidance on how domestic insurers should address material climate change-related financial risks.
The final guidance reflects NYDFS's consideration of stakeholder comments from its March 2021 proposal, and collaboration with domestic and international regulatory bodies.
In the guidance, NYDFS expressed, among other things, its expectation that insurers acquire the "new knowledge, expertise, and tools" to:
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incorporate into their governance structures, either "at the group or insurer entity level," climate risk considerations;
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assess current and future climate-related implications on their operations through "time horizons that are appropriately tailored" to their business;
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include in their financial risk management framework analyses of the effect of climate risks;
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employ scenario analyses when making business strategy decisions and conducting risk assessments; and
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disclose climate risks and consider climate-related financial disclosure initiatives, including those of NYDFS's eponymous Task Force, when determining their climate disclosure strategies.
While NYDFS requires insurers to satisfy the aforementioned organizational structure expectations by August 15, 2022, the state regulator stated its intention to provide additional guidance on timing for "the more complex expectations outlined in the guidance."
