The California Department of Insurance will conduct a prenotice public discussion regarding contemplated adoption of California Code of Regulations, Title 10, Chapter 5, Subchapter 3, Article 4.7 (commencing with section 2319.7). The proposed regulations aim to clarify the information related to emerging risks faced by insurance companies that the Department will consider during future financial examinations.
Participation in this prenotice public discussion will be in addition to, and not in substitution for, any participation in any formal rulemaking process that may follow. This invitation to the prenotice public discussion does not constitute a Notice of Proposed Action. Consequently, comments (oral or written) received in connection with these prenotice public discussions will not be included in any record of rulemaking that may follow. Similarly, the Department is not required to respond to comments received in connection with the prenotice public discussion. For this reason, if you wish to have comments included in any rulemaking file that may follow, or if you wish for the Department to respond to your comments as part of the process by which it adopts this regulation, you must present your comments during the public comment period according to the procedures outlined in any Notice of Proposed Action.
To increase public participation and improve the quality of regulations, interested parties are invited to attend the virtual meeting and offer comment, if they so choose. In connection with this prenotice public discussion, the Department hereby seeks public input regarding alternatives to the contemplated regulations.
This meeting is scheduled for November 14, 2025 at 10:30 a.m. The virtual workshop shall continue until all in attendance wishing to provide comments have commented, or 12:00 p.m., whichever is earlier. The link to register for the Web-based Virtual Format is https://us06web.zoom.us/webinar/register/WN_8L5R7ixrQK-e5QiKOTReig. Other methods of submitting comments are contained in the Prenotice Public Discussion Invitation.
The Long-Term Solvency Regulation aligns with the Commissioner’s work as a member of the International Association of Insurance Supervisors (IAIS), where he contributed to the development of guidance for insurance supervisors on climate risks, as well as various reports and standards. The regulation focuses on solvency strategies and leverages the growing implementation of standardized climate risk disclosures by regulators worldwide, alongside UN-led efforts to establish the Principles for Sustainable Insurance and the Sustainable Development Goals.
Topics of Interest Include:
– – Using global tools to safeguard Californians: Financial regulators from the Banque de France, the Bank of England, the Bank of the Netherlands, Canada’s chief insurance regulator, and the Monetary Authority of Singapore have participated in scenario analysis exercises. This presents an opportunity for enhanced collaboration among regulators to promote sustainability in insurance markets and to develop frameworks for addressing emerging risks. As the largest sub-national insurance market in the world, California’s regulator must actively engage and secure a seat at the table in global discussions on long-term risk analysis and solvency.
– – Robust financial oversight is essential for the security of Californians: The Department of Insurance supervises California-based insurance companies to ensure their stability and capacity to meet future obligations. According to the draft regulatory text released today, these companies must provide information to the Department to strengthen consumer protection against unforeseen challenges. Over the past three years, The Commissioner has contributed to the technical guidance of the IAIS climate risk framework, which has informed this proposed regulation as well as existing regulations in Europe for the banking industry.
– – New information on impact of climate and technology: Insurance companies are significant institutional investors in the U.S., with approximately $8.2 trillion in assets reported in 2022. Their investment performance directly influences their capacity to underwrite new policies. The Long-Term Solvency Regulation requires documentation of risks and opportunities projected for 2030, 2040, and 2050, which could impact underwriting, investments, or operations.
– – Addressing cybersecurity and artificial intelligence: The regulation will also address the evolving landscape of cybersecurity, focusing on data quality, the use of large datasets, and artificial intelligence.
– – Mitigating catastrophic risk: Companies will be required to share information on strategies to mitigate climate-related risks, such as extreme weather patterns and gradual market shifts expected to become pronounced by 2050. These risks include sea-level rise, changes in land use, and variations in water availability and agricultural productivity.
– – Enhancing stability amid transitions: The regulation will require information on transition risks associated with new technologies, particularly regarding the reduction of reliance on greenhouse gas-emitting technologies. Central to this effort are “stress tests” of climate risk scenarios for 2030, 2040, and 2050.
“Scenario analysis is a critical risk management tool for navigating uncertainty,” said Dr. Sean Carmody, Executive Director, Policy and Advice Division of the Australian Prudential Regulation Authority, the country’s insurance regulator. “It helps institutions anticipate and prepare for emerging risks—such as the impact of a changing climate and rapid technological innovation—by exploring a range of plausible futures and identifying areas of vulnerability and strategies that can strengthen resilience in the financial system.”