On April 18, 2022, the California Department of Insurance (“CDI”) released its Climate Risk & Resilience Analysis Survey performed by S&P Global Market Intelligence. The survey’s analysis assessed insurer investment portfolios from December 2018 to December 2019 and reviewed insurer investments in the fossil fuels and energy sectors, under the EU green taxonomy, and in green bonds. Through the report, the CDI is attempting to understand the exposure of the California insurance industry to financial risks associated with insurer investments in oil, gas, coal and electric utilities. The CDI has also started assessing insurer investments in green assets with the purpose of tracking the transition to a more sustainable economy.
The report showed that more than 1,200 carriers held $536 billion in fossil fuel investments in 2019. While the report indicated that these investments increased by $60 billion, they remained around 9.5% of total insurer assets under management.
This report is connected to the recent proposal by the Securities and Exchange Commission to require certain climate risk reporting and the National Association of Insurance Commissioners revised climate risk disclosure survey (see Locke Lord’s quick study discussing both here). The CDI expects to use information gathered through those programs to enhance its future reporting of insurer exposure to fossil fuel investment risk and participation in the energy transition.
The report CDI report can be found here.