"Climate change poses “wide-ranging and material risks to the financial system,” a New York state agency is warning, and the insurance industry needs to be prepared.

The New York State Department of Financial Services, or DFS, on Monday became the first state regulator in the country to release detailed guidance on how insurers should manage risks from global warming — including physical risks from extreme weather, as well as “transition risks” driven by society’s shift away from fossil fuels. In a 22-page document, the agency said insurers should disclose climate-related risks, integrate risk considerations into their governance structure and business decisions, and use scenario analysis to consider the short-, medium-, and long-term financial consequences of climate change.

“The guidance is intended to support insurers’ efforts to manage the financial risks from climate change, bolstering the safety and soundness of the industry and the protection of consumers,” said Adrienne Harris, acting superintendent of the DFS, in a statement."

Joseph Winters reports for Grist November 22, 2021. [2]