1) Nov 1 [press release] -- Treasury’s Federal Insurance Office Advances First Insurer Data Call to Assess Climate-Related Financial Risk to Consumers
Today, the U.S. Department of the Treasury’s Federal Insurance Office (FIO) took a critical next step to proceed with its first-ever data collection from insurers to assess climate-related financial risk to consumers across the United States.
FIO’s data collection will obtain previously unavailable insurance data at a ZIP Code level on a consistent, granular, and comparable basis from the largest homeowners insurance providers that collectively underwrite around 70% of homeowners insurance premiums nationwide. These nationwide data are critical to understanding how climate-related financial risks impact individuals and families across state markets and the United States, particularly given recent insurer pullbacks and significant premium increases in several states. In 2022, insurance covered only 60 percent of $165 billion in total economic losses from climate-related disasters, affecting millions of Americans. . . .
FIO today is providing public notice on its intent to proceed with the data collection, while also submitting the data collection request to the Office of Management and Budget for approval and public comment.
Today’s action advances the proposal for data collection that FIO published in October 2022. FIO has carefully reviewed the comments received and engaged with numerous stakeholders, including the National Association of Insurance Commissioners (NAIC) and state insurance regulators. Based on these discussions, FIO has streamlined and refined its data collection request to facilitate a more effective implementation of the collection. The changes to the data collection proposal are intended to help establish a national baseline for analytics at a ZIP Code level, while also reducing burden on small insurers. FIO will continue its engagement with the NAIC, state insurance regulators, and other stakeholders on this initiative.
The data collection is part of FIO’s work in response to President Biden’s Executive Order on Climate-related Financial Risk, EO 14030 (May 20, 2021), which called on FIO to “assess, in consultation with States, the potential for major disruptions of private insurance coverage in regions of the country particularly vulnerable to climate change impacts.” The collection will also advance FIO’s statutory mandates, including to monitor the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products and to monitor all aspects of the insurance industry. . . .
https://home.treasury.gov/news/press-releases/jy1867
2) Nov 2 FRN -- Pursuant to the Federal Insurance Office Act of 2010 (FIO Act), the Federal Insurance Office (FIO) of the U.S. Department of the Treasury invites public comment to OMB by December 4, 2023 regarding a data collection to assist FIO's assessment of the potential for any major disruptions of private insurance coverage in regions of the country particularly vulnerable to climate change impacts. The public is invited to submit comments on this request. Comments must be received by December 4, 2023 to be assured of consideration.
On May 20, 2021, President Biden issued the Executive Order on Climate-Related Financial Risk, Exec. Order No. 14030 (E.O. 14030), which called on FIO to: (1) “assess climate-related issues or gaps in the supervision and regulation of insurers” and (2) “further assess, in consultation with States, the potential for major disruptions of private insurance coverage in regions of the country particularly vulnerable to climate change impacts.” This information collection is necessary for FIO to advance its statutory mandates (including to monitor the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products, and to monitor all aspects of the insurance industry) and to fulfill the second undertaking for FIO under E.O. 14030.
Under FIO's data collection, FIO will obtain consistent, granular, and comparable homeowners insurance data that is not otherwise publicly available on a nationwide level. This nationwide view is critical to understanding how climate-related financial risks impact families and individuals across state markets and the United States, and how these effects could impact the broader financial system.
Under the FIO Act, FIO's authorities include monitoring all aspects of the insurance sector, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance sector or the U.S. financial system; monitoring the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products; collecting data and information on and from the insurance industry and insurers; analyzing and disseminating data and information; and issuing reports regarding all lines of insurance that FIO monitors. Each of these authorities is relevant to FIO's planned data collection.
Before FIO seeks to collect data directly from insurers, the FIO Act requires FIO to coordinate with relevant insurance regulators in the 50 states, the District of Columbia, and the five U.S. territories (collectively, the State Insurance Regulators), relevant federal agencies, and any publicly available sources in accordance with procedures set forth in the FIO Act before FIO collects the data directly from insurers. Prior to publishing FIO's October 2022 notice and request for comment related to the proposed data collection (October 2022 FRN), FIO coordinated with State Insurance Regulators to determine if they could provide in a timely manner the data that FIO proposed collecting. Following those efforts, as described in detail in the October 2022 FRN, FIO determined that the data that FIO was proposing to collect was not available or could not be obtained in a timely manner from any of the State Insurance Regulators, relevant federal agencies, or publicly available sources.
After the end of the comment period for the October 2022 FRN, FIO had additional meetings with the NAIC and the State Insurance Regulators to offer increased coordination and collaboration between FIO's proposed data collection and any efforts of the NAIC and State Insurance Regulators. On August 15, 2023, the NAIC announced a plan to issue a data call to assist State Insurance Regulators to collect data from insurers to better understand property markets and coverages and protection gaps, citing the “increasing frequency and severity of weather events, rising reinsurance costs, and inflationary pressures” that were creating insurance availability and affordability issues.
FIO supports continued coordination and collaboration efforts that would enable it to fulfill its statutory mission while minimizing any burdens on insurers, to the extent feasible. It is unclear when the NAIC data call may be implemented and whether all State Insurance Regulators will participate in any proposed NAIC data call. FIO will continue to engage with the NAIC and monitor its development of a homeowners insurance data collection template and the use of that template or similar templates by State Insurance Regulators.
In sum, FIO has determined that the nationwide ZIP Code level data that it seeks to collect is not available or may not be obtained in a timely manner and has therefore determined to use its data-collection authorities under the FIO Act to obtain the necessary data directly from certain insurance groups.
The proposed data collection would provide FIO with a nationwide view of homeowners insurance that is critical to understanding how climate-related financial risks impact families and individuals across the United States and how these effects could impact the broader financial system. Since the publication of the October 2022 FRN, multiple homeowners insurers have announced decisions to exit certain areas or to decline to renew certain policies. As Treasury stated in a recent report: “Some evidence shows that states with exposure to climate hazards are already experiencing higher insurance costs, and the availability of insurance could have differential impacts for mortgage availability.” Price increases often disproportionately impact traditionally underserved and disadvantaged communities and consumers, including those who are low- and moderate-income. Price increases could make insurance unavailable for such groups because they may be priced out of the market. A recent survey showed that about half of U.S. homeowners who did not purchase homeowners insurance had household incomes under $40,000 per year. FIO's work will facilitate further research and analysis to better understand the effects of climate-related risks on housing and the resulting ramifications for household finances and homeowners.
FIO plans to use the information obtained from this data collection to perform a nationwide analysis to advance its statutory mandates and to respond to E.O. 14030. FIO will assess the impact of climate-related risk on the availability and cost of homeowners insurance in the United States. The primary goal of this data collection is to obtain consistent, comparable, and granular homeowners insurance data that is not otherwise publicly available that will enable FIO to assess the impact that climate-related physical risks have had on the homeowners insurance market since 2017 at a ZIP Code level. Data of the type FIO seeks is, at present, generally available only at the national or state level, with limited data available at a more granular level. Using the data from this collection, FIO will analyze nationwide trends, including comparisons of trends in homeowners insurance availability and costs. This data collection and analysis will benefit a wide variety of stakeholders, including insurers, reinsurers, homeowners, mortgage lenders, and policyholders, and inform policymakers by establishing a framework for granular, consistent, and comparable data with which to assess the localized impact of climate-related events and conditions on trends in homeowners insurance availability and cost. This data will help highlight underwriting trends and help identify areas where less-available or more-costly insurance is associated with higher risks from climate-related events. Such information may also help inform private and public efforts at the federal, state, and local levels to target pre-disaster mitigation measures and to improve policy in this area.
The narrower focus of this data collection includes data that will help establish a national baseline for analytics in this area. There is also potential value in collecting and analyzing more detailed information in this area. FIO intends to conduct climate-related data collections and analyses in the future, with a goal of doing so on an annual basis. In its initial analysis, FIO will focus on understanding nationwide trends in underwriting data. In future data collections, FIO may analyze in more detail, among other things, climate-related impacts on traditionally underserved communities or consumers, minorities, and/or low- and moderate-income persons.
FIO submission to OMB:
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202311-1505-001 Click IC List for data collection instruments, View Supporting Statement for newly added technical documentation. Submit comments through this webpage.
FRN:
https://www.federalregister.gov/d/2023-24248
For AEA members wishing to submit comments, "A Primer on How to Respond to Calls for Comment on Federal Data Collections" is available at
https://www.aeaweb.org/content/file?id=5806