Preparing for the SEC update on climate-related disclosure

How to manage climate change risks to the insurance sector

A proposed rule from the SEC will regulate the disclosure of climate-related risks by insurers and other public companies. While the new SEC climate disclosure ruling may help facilitate greater consistency and easier comparability of emissions across companies, industries, and locations, compliance will require significant planning and effort. In this article, we offer seven considerations to help insurers prepare for the new SEC ruling.

Insurers anticipate new SEC climate risk disclosure ruling

On March 21, 2022, the Securities and Exchange Commission (SEC) released a proposed rule to regulate the disclosure of climate-related risks across public companies. The rule requires public insurers to include climate-related disclosures in their registration statements and reporting, including climate-related risks that are reasonably likely to impact their business, results of operations, or financial condition. This would include disclosure of greenhouse gas (GHG) emissions. The SEC proposed rule builds on the disclosure frameworks from the Task Force on Climate-related Financial Disclosures (TCFD) and the GHG Protocol.

Discussion of the rule is prevalent throughout the insurance industry. If passed, it may lead to greater consistency and comparability of emissions and climate-related data across companies, industries, and locations, although it will require planning and effort. Forward-looking insurers should begin preparing now to comply with the new disclosure requirements.

Companies are asking: How do we prepare?

For insurers, climate-related risks and opportunities are key topics affecting the industry’s core business. The scientific consensus is that a continued rise in average global temperatures will have a significant effect on weather-related natural catastrophes and will account for an increasingly large share of natural catastrophe losses. For example, property and casualty companies that write business relating to catastrophes will have a heightened focus on the impacts of climate-related risks. With the SEC proposed ruling, we are now seeing insurers broadening the lens beyond climate-related activities and utilizing that information to focus more broadly on environmental, social, and governance (ESG) matters.

As insurance companies plan for SEC climate disclosure compliance, here are seven actions to consider.

Getting started

The SEC’s proposal around climate change will create meaningful changes across insurers’ financial reporting processes. By carefully assessing these impacts, insurers can better understand the challenges, opportunities, and risks the standard presents. Download the report to learn how to build an executable strategy to aid in meeting the SEC’s regulatory reporting requirements.

Get in touch

Matt Martinez
Audit & Assurance partner
Deloitte & Touche LLP
+1 312 486 1781

David Sherwood
Managing director
Deloitte Risk & Financial Advisory
Deloitte & Touche LLP
+1 203 423 4390

Donna Szatkowski-Zych
Audit & Assurance partner
Deloitte & Touche LLP
+1 212 436 6139

Ashlee Bartlow
Audit & Assurance senior manager
Deloitte & Touche LLP
+1 312 486 1737

Kedar Kamalapurkar
Consulting managing director
Deloitte Consulting LLP
+1 703 885 6201

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