Senators’ bipartisan letter urges the FIO to abandon ESG policies that would increase premiums for policyholders
WASHINGTON—U.S. Senator Mitt Romney (R-UT) joined a bipartisan group of colleagues, led by Senators John Thune (R-SD) and Tim Scott (R-SC), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, in sending a letter to U.S. Department of the Treasury Secretary Janet Yellen raising concerns with the Federal Insurance Office’s (FIO’s) efforts to force the Biden Administration’s unrealistic environmental, social, and governance (ESG) agenda onto the state-regulated insurance industry. This could result in state insurance regulators and insurers being coerced into adopting costly, one-size-fits-all climate-mitigation strategies.
“Across the nation, insurers work day in and day out to provide reliable coverage to the public to ensure they are protected when adverse weather events strike or accidents occur,” the senators wrote. “And, to be clear, it is in insurers’ best interest to take into account these various risks – whether it be weather risks or otherwise – that could affect their customers and integrity of their policies. Therefore, it is concerning that the Biden administration is ignoring steps insurers and state insurance regulators are already taking and instead utilizing the FIO to continue pushing ESG policies as part of its unrealistic environmental agenda.”
“Insurance has been, and continues to be, regulated at the state level, including as it relates to what data is collected and reported by insurance companies,” said Nat Wienecke, senior vice president of federal government relations and political engagement at the American Property Casualty Insurance Association (APCIA). “APCIA understands the potential national importance of the issue of climate and the possible impact on the financial services sector and agrees that FIO should be coordinating with the state insurance regulators when it comes to data collection from insurers, as Dodd-Frank requires.”
“FIO’s effort is a step back in understanding climate change rather than any sort of progress,” Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies. “State regulators have been working with insurers for years gathering data on how climate has affected companies, their policyholders, and the communities they live and work in. Rather than trying to reinvent the wheel, FIO should seek to collaborate with existing research and build on the substantial progress already being made in understanding the impact of climate change.”
The letter was also signed by Senators John Barrasso (R-WY), John Boozman (R-AR), Mike Braun (R-ID), Katie Britt (R-AL), Ted Budd (R-NC), Shelley Moore Capito (R-WV), Bill Cassidy (R-LA), John Cornyn (R-TX), Tom Cotton (R-AR), Kevin Cramer (R-ND), Mike Crapo (R-ID), Ted Cruz (R-TX), Steve Daines (R-MT), Deb Fischer (R-NE), Chuck Grassley (R-IA), Bill Hagerty (R-TN), John Hoeven (R-ND), Cindy Hyde-Smith (R-MS), Ron Johnson (R-WI), John Kennedy (R-LA), James Lankford (R-OK), Mike Lee (R-UT), Cynthia Lummis (R-WY), Roger Marshall (R-KS), Joe Manchin (D-WV), Jerry Moran (R-KS), Pete Ricketts (R-NE), Jim Risch (R-ID), Mike Rounds (R-SD), Marco Rubio (R-FL), Rick Scott (R-FL), Thom Tillis (R-NC), J.D. Vance (R-OH), Roger Wicker (R-MS), and Todd Young (R-IN).
Full text of the letter can be found here and below.
Dear Secretary Yellen:
In March, the Senate passed H.J. Res. 30, a joint resolution disapproving of the Department of Labor’s “Prudence and Loyalty in Selecting Plan Investment and Exercising Shareholder Rights” rule. Unfortunately, President Biden vetoed this resolution.
Though this was disappointing, it was not surprising given the persistence of the Biden administration in adopting environmental, social, and governance (ESG) policies as part of its effort to force its unrealistic environmental agenda onto the American public. And while there are countless examples of irresponsible and misguided efforts to adopt ESG through various federal rules, regulations, and guidance, we write today to highlight our concerns with recent climate-related actions taken by the Department of the Treasury’s Federal Insurance Office (FIO), including its proposed data climate call notice.
As you know, the FIO was created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), and it is tasked with monitoring the insurance industry. In August 2021, the FIO published a request for information in which it sought public input on climate-related issues ranging from views on the FIO’s climate priorities, like assessing gaps in the supervision and regulation of insurers, to assessing how climate change could affect the insurance market. Furthermore, in October 2022, the FIO proposed an unworkable data collection effort to obtain certain insurance data that the FIO believes is necessary in determining what insurance coverage areas are most susceptible to climate-related risks.
Across the nation, insurers work day in and day out to provide reliable coverage to the public to ensure they are protected when adverse weather events strike or accidents occur. And, to be clear, it is in insurers’ best interest to take into account these various risks – whether it be weather risks or otherwise – that could affect their customers and integrity of their policies. Therefore, it is concerning that the Biden administration is ignoring steps insurers and state insurance regulators are already taking and instead utilizing the FIO to continue pushing ESG policies as part of its unrealistic environmental agenda.
Insurance is regulated at the state level and has been over 150 years. And though the FIO’s actions to date do not enact formal rules or regulations, they do place pressure on state insurance regulators and insurers themselves. We are concerned that this may ultimately result in state insurance regulators and insurers feeling coerced into adopting one-size-fits-all climate-risk mitigation policies rather than building on existing efforts to mitigate risks and manage policyholders’ exposure to changing weather patterns as deemed appropriate by the insurers and state insurance regulators on the ground, which has served the industry and public well.
State insurance regulators and the National Association of Insurance Commissioners (NAIC) have long focused on requiring insurers to examine exposures to financial risks, including climate and weather risks. Additionally, the NAIC has several tools at its disposal, such as the NAIC Climate and Resiliency Task (EX) Force, the Climate Risk and Resiliency Resource Center, as well as an Insurer Climate Risk Disclosure Survey, which was adopted in 2010, and has been updated as recently as April 2022 to capture additional information.
We are not in any way writing to suggest that insurers and their state insurance regulators should not be conscientious of changing weather patterns and the industry’s exposure to such. However, it is vitally important that the FIO and the entire Biden administration understand that efforts strong arming insurers and state insurance regulators into potentially adopting certain ESG strategies, all in the name of climate-risk mitigation, would have real-world impacts. These impacts would come in the form of higher compliance costs on insurers and higher premiums on Americans, all while families and businesses across our nation continue to deal with a persistent inflation crisis.
As you continue your work, it is of utmost importance that the FIO resist pressures to insert ESG policies into the heart of its work and pressure insurers and state insurance regulators into adopting tenets of the Biden administration’s unrealistic environmental agenda. Instead, we hope that the FIO will recognize that insurers and state insurance regulators are best positioned to make determinations about what risk mitigation strategies (environmental or otherwise) to implement, as they have responsibly done up to this point.
Thank you for your attention to our concerns, and we hope that you will be receptive.