Scenario Analysis for California’s Insurance Regulator

California’s insurance industry faces significant risks from climate change, including both the transition risks facing all financial institutions as the global economy shifts toward decarbonization and the singular combination of physical risks–wildfire, drought, coastal hazards, extreme heat—that threaten California’s communities and businesses. Accurately assessing and mitigating these risks will be vital to ensuring the long-term viability of the insurance market in California, the availability and affordability of insurance for California residents and businesses, and the state’s physical and financial resilience in a changing climate.

CLEE’s report Looking Forward explores the field of climate risk scenario analysis—a key instrument to assess financial risk in projected future scenarios—and makes recommendations for the California Department of Insurance to design scenario analysis exercises and engage California insurance companies in forward-looking risk assessment.

Learn more and read the report here.

Additional Author: Grayson Peters