American Property Casualty Insurance Association

  • California Commissioner Denies Climate Activist Petition
  • Climate Change - Regulatory News

    On March 21, environmental, consumer and social justice organizations collectively delivered a formal petition to California Department of Insurance Commissioner Ricardo Lara seeking mandatory insurer disclosures of the fossil fuel projects they insure.

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    On April 22, Commissioner Lara released his public response stating that he "declines to grant the Petition at this time. While the Commissioner shares the Petitioners' concerns about the effects of climate change and potential risks to consumers and insurance companies, the Petition only targets a single element of the much broader challenge of climate risk. The Commissioner is pursuing a much more comprehensive climate strategy , which will include incentivizing climate smart investments , and invites the Petitioners, consumers, and the insurance industry to work with him in realizing a comprehensive climate strategy."

    The Commissioner further responds that his approach to climate risk mitigation will be built on analysis, innovation, and cohesive policies that bring insurers into the fight against climate change, not just intermittently, but in a sustained way. According to the statement, the CDI will pursue a sustainable insurance sector in California that reduces climate risks through innovative products that "promote mitigation and adaptation, thoughtful assessment of physical and transition risks, collaboration with insurers and state regulators, expanding information on hazards throughout the state, and laws intended to implement effective policies."

    Commissioner Lara acknowledges that insurers already are required to disclose investments publicly in their financial statements, and the Department has developed a methodology to identify and categorize the fossil fuel portion of those investments. The Department has a database that includes information regarding insurers' investments in fossil fuel-related entities. The Department also increased the utility of those data by partnering with collaborators to produce scenario analyses as recently as January 2019.

    In response to the petitioners' call for a rule to require insurers to disclose all fossil fuel-related companies and projects that they insure, the Commissioner states the proposed rule alone would not effectively address the complex and historically-entrenched manner in which fossil fuels are utilized by businesses today. Instead, he adds, it is necessary to develop an approach that encourages the best ideas of climate-aligned businesses to break these harmful habits.

    The Commissioner also determined that the Petition raises significant other policy questions that go beyond the insurance sector. Further consideration will be necessary to ensure that "any new regulation is crafted carefully to maximize rather than frustrate an effective climate strategy." For example, if the public had the ability to review the policy limits and coverage of specific businesses, Commissioner Lara warns that such information could be used for purposes inconsistent with climate goals by exposing and severely impairing a business's internal strategies and efforts to transition from fossil-fuel energy to renewable energy.

    Commissioner Lara concludes with a reminder of his early action to establish a Deputy Commissioner position for Climate and Sustainability that prioritizes climate policies, including the issues raised in the Petition.

    APCIA welcomes any member comment or question on this matter. Please email feedback to,, and/or

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