US NAIC Spring 2024 National Meeting Highlights: ESG
At the Spring 2024 National Meeting of the US National Association of Insurance Commissioners (“NAIC”), a number of sessions were focused on environmental, social and governance (“ESG”) initiatives, led by the Special (EX) Committee on Race and Insurance (the “R&I Committee”) and the Climate and Resiliency (EX) Task Force (“C&R Task Force”), both of which report to the NAIC Executive (EX) Committee. While neither the R&I Committee nor the C&R Task Force announced any major developments or exposed any substantive items for review or comment, both bodies reported on the ongoing progress of several initiatives. A summary of these items is below.
Special (EX) Committee on Race and Insurance
The R&I Committee met on March 16, 2024, and received status reports from the Health, Life and Property/Casualty Workstreams:
- Health Workstream: The Health Workstream reported on the work it has undertaken in the last year, which included the Health Workstream’s continued education on benefit design, particularly on preventive care and mental health coverage. The Health Workstream will meet in regulator-to-regulator sessions to consider its 2024 initiatives, which may include exploring the use of a referral document that would refer certain issues to other NAIC groups for additional action, and that it would continue to build out and drive engagement on its NAIC Connect site. The Health Workstream reported that as part of its 2024 initiatives, it also plans to reinvigorate the discussion on data collection in the health insurance field, particularly with respect to how data collection in the health insurance field is unique.
- Life Workstream: The Life Workstream reported that it distributed the Financial Wellness Resource Guide, a resource for insurance departments highlighting financial literacy initiatives, in the District of Columbia, Maryland and Oregon. The Life Workstream plans to expand the guide to include other state initiatives and programs from outside the organization. The Life Workstream also discussed barriers to accessing life insurance and will explore criminal history as a barrier to access, starting with a panel on March 28. The Life Workstream intends to invite the US Department of the Treasury and the Consumer Financial Protection Bureau to present at a future meeting, as they are both exploring this issue as well.
- Property/Casualty Workstream: The Property/Casualty Workstream reported that the Property/Casualty Market Intelligence data call will be held this year, and the Property/Casualty Workstream will focus later in the year on the results and any impact on underserved communities. The Property/Casualty Workstream will also examine the growth of residual markets and other trends that may reflect market availability and affordability pressures, particularly on underserved communities, including communities of color.
The R&I Committee also received an update from the State Member Diversity Forum on the NAIC Foundation, a not-for-profit corporation that provides scholarship and internship opportunities to college students in underserved communities. The NAIC Foundation is identifying prospective college and university partners, while also exploring internship programs with state insurance departments. It aims to have scholarship and internship programs established with up to five colleges/universities, along with departments of insurance for the 2024–2025 academic year. The State Member Diversity Forum also provided an update on the diversity, equity and inclusion (“DEI”) training that is being offered to regulators. Since being launched in February 2023, more than 1,200 regulators have registered to take the training course. The State Member Diversity Forum is tracking regulator participation by state and encouraging more states to take the training course.
In addition, the R&I Committee heard a presentation from John Pelletier of Champlain College on the 2023 National Report Card on State Efforts to Improve Financial Literacy in High Schools, which explored state efforts to improve financial literacy in high schools. The presentation highlighted the importance of financial literacy for reducing poverty and inequality, promoting economic mobility and narrowing the wealth gap, and fostering a more equitable and prosperous society. The presentation also noted that 23 states have laws and regulations that will guarantee—now or by 2028—that every high school student graduates having taken a standalone, full-semester personal finance course or its equivalent.
Climate and Resiliency (EX) Task Force
At its March 18, 2024 meeting, the C&R Task Force heard updates on federal developments and legislation affecting climate resilience. The C&R Task Force also heard a presentation from Marsh McLennan that highlighted the challenges and opportunities for the insurance sector and state regulators to work together to advance meaningful adaptation to climate risks. The presentation discussed some of the emerging innovations and partnerships in the private and public sectors, such as community-based catastrophe insurance and parametric products. In addition, the C&R Task Force heard a presentation on the Methow Valley and the grassroots initiative that developed and implemented a climate action plan for the rural community in Washington that has faced repeated wildfires and flooding.
Lastly, the C&R Task Force received an update from the Solvency Workstream. During the 2023 Fall National Meeting of the NAIC, the Solvency Workstream had directed NAIC members to draft a risk-based capital (“RBC”) blanks proposal that would propose changes to the property/casualty reporting framework for climate scenario analysis. The proposal would require property insurers to use the “Climate Conditioned Catalog” versions of catastrophe models, to reflect adjusted frequency and severity for 2040 and 2050 hurricane and wildfire risks. The joint trade associations expressed concerns about the relevance, benefit, cost, and difficulty of the proposal, and suggested that companies that do climate scenario analysis do not use the proposed approach. The Solvency Workstream asked for constructive feedback and alternative ideas from the joint trade associations as the proposal moves to the next step.
To view additional updates from the US NAIC Spring 2024 National Meeting, visit our meeting highlights page.
