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The Michigan Department of Insurance and Financial Services (DIFS) will now require insurance companies based within the state to report their climate-related risks and mitigation strategies to the national climate risk disclosure survey.
Michigan will join 26 other states who require providers to fill out the survey from the National Association of Insurance Commissioners. According to a statement from DIFS, this survey will help insurance companies and customers prepare for short- and long-term climate risks.
“Across the country, we are seeing more frequent and more severe weather events, and this is causing some insurers to exit the market in coastal states,” DIFS Director Anita Fox said in a statement. “Thankfully, our weather patterns in Michigan have been more consistent, but we must be proactive to ensure that the future outlook for Michigan’s insurance market remains stable for Michigan consumers and businesses.”
In June, State Farm and Allstate, some of the nation’s largest insurance companies, announced they were pausing the sale of property and casualty coverage in California, citing rising costs and wildfires as part of their decision. Insurance companies have also pulled out of states like Florida and Louisiana due to the threat of climate-related disasters.
The climate risk disclosure survey has been conducted annually since 2010 and covers about 80% of the national insurance market. The survey includes companies with more than $100 million in premiums across multiple lines including health, life, property and casualty insurance. It also has sections on governance, strategy risk management, investment, metrics and requires the surveyed companies to measure their progress in reducing climate risks across all areas of their business.
According to the DIFS, insurance regulators in France, Switzerland and the United Kingdom require companies to file similar reports. Financial regulators in the U.S. such as the U.S. Securities and Exchange Commission are also working to require climate risk disclosures for financial institutions.
“By remaining vigilant and focusing our insurers on the risks posed by climate change, we can help ensure that Michigan remains a great place to live, work, and do business,” Fox said.
DIFS offers advice on preparing for severe weather on its disaster preparedness webpage. It also provides consumer protection, outreach, and financial literacy and education services for Michigan residents.
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