Michigan insurance companies now have to disclose climate risks
Climate change has rocked the insurance industry. Across the country, companies have paid out billions of dollars more in recent years.
Now, larger insurance companies in Michigan have to disclose their climate change risks – and how they plan to address them, according to a new state requirement.
The Climate Risk Disclosure Survey will help determine whether — and how — Michigan insurance companies are preparing for climate change, said Anita Fox, director of the state Department of Insurance and Financial Services.
“Really, the question is: Are they preparing enough for what could happen in the future, and what is the full financial impact?” she said. “Because we want to make sure that this remains a competitive insurance market, where Michiganders have choices and competitive prices.”
The National Association of Insurance Commissioners first developed the climate risk survey in 2010. More than two dozen other states already require it. In Michigan, 89 companies that earn at least $100 million dollars in premiums annually have to complete it this month.
Fox noted that insurers in other states have pulled out of the market due to extreme weather events, like wildfires, hurricanes and floods. And while Michigan has seen fewer climate-related natural disasters, residents have still contended with crop damage, wildfire smoke and flooding.
Fox said the climate risk survey is meant to ensure that companies are transparent about their approaches.
“How has the risk changed? How has your way of responding to risk changed?” she said. “So that we can keep that issue on the forefront of our insurance markets’ assessments of what they need to do here in Michigan.”
Fox said the climate survey won’t cause insurance prices to go up, because it’s just gathering data that the companies already have. But extreme climate events can make costs skyrocket, which has happened in states like California, Florida and Louisiana.
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