The New York State Department of Financial Services (DFS) has issued a proposed, detailed guidance for New York–regulated domestic insurers, outlining the department’s expectations for managing the financial risks from climate change. 

The proposed guidance builds on the DFS circular letter on Sept. 22, 2020. That letter outlined the department’s expectations that all New York insurers start “integrating the consideration” of the financial risks from climate change into their governance frameworks; risk-management processes; and business strategies, along with developing their approach to climate-related financial disclosure. 

DFS is seeking input on the guidance, which will be finalized following a 90-day public comment period, per a March 25 department news release.

“This proposed guidance provides a blueprint for insurers to manage the complex financial risks of climate change,” Superintendent of Financial Services Linda Lacewell said in the release. “We look forward to receiving input from the industry, experts and others to help shape our final guidance. The imperative of climate change is now.”

The proposed guidance is the first climate-related guidance issued by a U.S. financial regulator, the department noted. 

It is based on the New York Insurance Law; National Association of Insurance Commissioners manuals; and publications, guidance, and supervisory statements of international regulators and networks, such as the Bank of England Prudential Regulation Authority, the Network for Greening the Financial System, the International Association of Insurance Supervisors, the Sustainable Insurance Forum, and the European Insurance and Occupational Pensions Authority.

Among other things, the proposed guidance covers governance, business models and strategy, risk management, scenario analysis, and public disclosure. Each insurer is expected to assess the significance of climate-related financial risks to its business and take a “proportionate” approach to managing those risks that reflects its exposure to those risks as well as the “nature, scale and complexity” of its business, DFS said.

DFS will continue to develop its supervisory approach to managing and disclosing climate risks over time, considering U.S. federal and state regulatory developments, as well as evolving practices in the industry and in the international supervisory community. 

Based on the industry’s progress and the impact of climate risks to insurers, DFS will also develop a timeframe by which insurers should have “fully embedded” their approaches to managing climate risks in their governance structures; risk-management frameworks; and processes, business strategies, metrics and targets, and disclosure methods. 

Those interested are encouraged to provide comments on the proposed guidance by June 23. Instructions for providing comments can be found on the public consultation section of the climate-change page on the DFS website (www.dfs.ny.gov/industry_guidance/climate_change), the department said.    

“Even with changes in the labor market, workers’ confidence in their ability to live comfortably in retirement remains high overall,” Craig Copeland, EBRI senior research associate and co-author of the report, said. “However, while resilience may be the watchword for 2021, three in 10 workers say the pandemic has negatively impacted their ability to save for retirement, due to reduced hours, income, or job changes. The group that was most likely to have their ability to save impacted were those that were more likely to have low confidence historically, such as low income, not married, and having a problem with debt.”

The RCS was fielded in January. Last year, the RCS was fielded twice — once in January prior to the COVID-19 outbreak and then re-fielded through a supplemental survey of key questions from March 20-30, 2020, “allowing for comparisons before and during the pandemic,” EBRI noted.

The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute based in Washington, D.C. that focuses on health, savings, retirement, and economic-security issues. Greenwald Research, also based in Washington, D.C., is an independent research firm that has been specializing in retirement, employee benefits, and health-care research for more than 35 years.

Work adjustments

Nearly two in 10 (18 percent) workers said their hours and/or pay were reduced since Feb. 1, 2020. One out of 10 employees said they were furloughed/temporarily laid off. In total, 39 percent of workers reported their household had some type of negative job or income change since Feb. 1, 2020. 

However, 21 percent of workers reported having some type of positive change in work in the same timeframe.

Employees who had a negative change in work were more likely to say that the COVID-19 pandemic reduced their confidence in having enough money to live comfortably throughout their retirement years. Half of workers who had a negative change in work said that they were either somewhat or significantly less confident because of the COVID-19 impact, compared with just 24 percent of those who did not have a negative change, the survey found.

Satisfaction with workplace-retirement plans

The survey found only 22 percent of workers adjusted the age at which they plan to retire because of the pandemic and its economic impact, including 17 percent who plan to retire later. 

The RCS continues to demonstrate that workers expect to work in retirement, which is “drastically different” than the experience retirees report. Three-quarters of workers expect to work in retirement compared to just three out of 10 retirees who report doing so.

More than four in five workers who are offered a workplace retirement-savings plan are satisfied with the benefit. Just three out of 10 report having made changes to their plan in the past year. Among those who did, six in 10 say they increased the amount they contribute, while one out of four say they reduced or stopped contributions.

“Showing further resilience, just one in 10 workers who have saved for retirement say they have taken a loan, hardship distribution or early withdrawal from their workplace retirement plan in the past 12 months,” Copeland said. “The most likely reasons for taking this money out were for paying off credit card debt, or for a COVID-related need.”

About 80 percent of plan participants were satisfied with the investment options available, although about 30 percent say they would like more options available, an increase from 22 percent in 2020. 

The 2021 Retirement Confidence Survey of 3,017 Americans was conducted online Jan. 5 through Jan. 25. All respondents were age 25 or older. The survey included 1,507 workers and 1,510 retirees, and this year included an “oversample” of Black Americans and Hispanic Americans. EBRI and Greenwald researchers will be conducting a fuller analysis of differences by race and ethnicity and will issue a separate report on those findings in June 2021.