BILL NUMBER: S9435
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the insurance law and the financial services law, in
relation to establishing the climate protection insurance act
 
PURPOSE:
This bill regulates New York-based insurers to help prevent global and
local catastrophe due to climate change and associated potentially
discriminatory effects. This bill aligns New York's insurance regu-
lations with the climate and equity objectives of the previously-enacted
Climate Leadership and Community Protection Act (CLCPA) of 2019 by:
preventing New York-based insurers from insuring polluting new fossil
fuel projects; aligning insurer policies with science-based objectives
for reducing climate-heating pollution; divesting insurance company
investment funds from oil, gas and coal companies; strengthening the
state's anti-discrimination requirements for insurance and climate risk;
and requiring the state's regulators to study the insurance markets to
assess climate risks to the insurance markets, the state, localities,
and equity in treatment of homeowners, and recommend potential legisla-
tive and regulatory action to protect New Yorkers from such risks.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends state insurance law to prevent New York-based insurers
from insuring more new oil, gas and coal projects, since they are incom-
patible with avoiding climate risk; requires insurers to align their
practices with science-based emissions reductions targets; and requires
them to divest their investment funds from oil, gas and coal. It also
requires the state's insurance regulator, the Department of Financial
Services (DFS) to report on its implementation of this section's
provisions.
Section 2 further aligns state regulation with the state's objectives of
reducing climate risks.
Section 3 defines a community vulnerable to blue lining.
Section 4 requires state regulators to identify communities vulnerable
to blue-lining and prohibits such discrimination. It also grants the
commissioner the authority to prohibit non-renewals of policies in such
communities based on certain conditions.
Section 5 requires at least one year of notice from an insurer to any
policyholder before it may not renew such a homeowner's insurance poli-
cy.
Section 6 requires DFS to study climate risks to homeowners and report
their findings to the public and legislature, including recommendations
for regulatory and legislative actions to ensure affordability and
prevent blue-lining.
 
JUSTIFICATION:
New York State is severely threatened by accelerating climate change,
whose primary cause is burning oil, gas and coal. Insurance companies
cause climate change by insuring oil, gas and coal projects as well as
investing policyholder funds into oil and gas companies. After endanger-
ing policy-holders by furthering climate change, insurers raise rates or
entirely abandon local areas or even entire states due to the effects of
the resulting climate crisis: flooding, sea level rise, wildfires and
extreme weather events, such as hurricanes.
New York enacted the Climate Leadership and Community Protection Act
(CLCPA) to reduce pollution in an equitable manner at the pace and speed
necessary to prevent global, statewide and local catastrophe and avoid
discriminatory practices (known as "blue-lining").
Currently, New York-based insurers are not aligned with the CLCPA's
provisions.
Complaints of rate hikes are already widespread in coastal parts of New
York.
Without proper and careful regulation, insurers may engage in discrimi-
natory practices in their insurance practices, such as discriminating by
race or income.
Many of the most climate-vulnerable parts of New York are inhabited by
predominantly low income families and/or people of color, who will face
greater hardship due to weaker financial resources as well as current
and historic discrimination.
Ending new fossil fuel projects is aligned with the state's CLCPA and
the International Energy Agency (IEA) analysis that no new large-scale
fossil fuel projects are needed to deliver the energy the world needs.
New projects started today are therefore at great risk of becoming
stranded assets that are non-performing financially as renewable energy
takes over.
The insurance industry is primarily regulated at the state level.
Therefore, this legislation would regulate insurers by aligning their
practices with New York's objectives of preventing catastrophe and
discrimination by:
*Ending New York based insurers and their New York subsidiaries insur-
ance for new large-scale new polluting oil, gas and coal infrastructure
projects worldwide, as well as in New York. New York-based insurers
would no longer provide policies for projects such as coal mines, oil
and gas pipelines, fracking projects, LNG terminals and so forth.
*Divesting insurers' investment funds, which are a top source of capital
finance worldwide, from oil, gas and coal.
*Requiring insurer's policies to match science-based climate objectives
to reduce pollution generated through business practices at the pace and
speed necessary to avoid global and local catastrophe.
*Strengthening New York's anti-discrimination requirements for insurance
to include climate risks.
*Requiring New York's insurance regulator, the Department of Financial
Services, to study and report on the impact of climate change on New
Yorkers through insurance, and recommend potential legislative and regu-
latory changes to handle the coming risks and accelerating crisis.
 
PRIOR LEGISLATIVE HISTORY:
None
 
FISCAL IMPLICATIONS:
TBD
 
EFFECTIVE DATE:
Immediately

Statutes affected:
S9435: 107 insurance law, 107(a) insurance law, 3425 insurance law, 3425(d) insurance law