California-based insurers will soon have to show state regulators how they expect to stay solvent through 2050. Insurance Commissioner Ricardo Lara has finalized the Long-Term Solvency Planning Regulation, which requires domestic insurers to document how climate change, cyber threats, artificial intelligence and other emerging risks could affect their finances over the coming decades. According to the Department of Insurance’s announcement of the final rule, the regulation took effect October 26, 2026, and insurers’ first long-term solvency plans must be assembled and available to department examiners by January 1, 2028.

The department calls the rule the first of its kind in any U.S. state. It applies to insurers domiciled in California, across all lines of business, and adds a new section 2319.7 to Title 10 of the California Code of Regulations under the rulemaking file REG-2025-00025. The department cites its authority under Insurance Code § 739.9, and ties the rule to the risk-based capital provisions of Insurance Code § 739.2. Subdivision (d) of that section says insurers should try to hold capital above the minimum risk-based capital levels, as a cushion against risks the formula does not fully measure. The new regulation in effect asks insurers to document how they are analyzing those additional capital needs.

The rule operates in two tiers. Under the draft text the department released for public workshop in October 2025, every domestic insurer must maintain and keep current its data on risk mitigation technologies used by its policyholders, along with any analysis of how well those measures have performed and are expected to perform. Insurers that wrote more than $50 million in direct premium nationwide in the prior calendar year face the more extensive requirements. Because the threshold resets each year, an insurer’s status can change from one year to the next.

Those larger insurers must assess which emerging risks and opportunities are material to their underwriting, investments or operations. The draft groups these into four categories. The first is technology, including the growing scale and complexity of data, data quality and cybersecurity. The second is physical climate risk, covering both acute extreme-weather events and slower, compounding changes such as sea-level rise, water availability and temperature extremes. The third is transition risk as the economy shifts away from greenhouse-gas-emitting technologies, including the effect of future government action. The fourth is a catch-all for other risks likely to grow more volatile over 20 years, such as economic trends or litigation.

For the risks they find material, those insurers must document their analysis and mitigation strategies with projections for 2030, 2040 and 2050. On the climate side, the draft calls for stress tests of forward-looking climate scenarios, explanations of how the scenarios were chosen and where the uncertainties lie, and analysis of investment concentrations and exposure to catastrophic events such as extreme heat, severe convective storms, flooding, earthquakes and hurricanes. Insurers must also set long-term investment strategy targets with performance metrics and interim checkpoints, and describe how they will identify opportunities for new products, such as coverage for low- or zero-emission infrastructure. Finally, they must explain whether their climate and technology risk expertise is built in-house or bought from outside vendors.

The plans are not filed publicly. The department describes the oversight as confidential and conducted through its financial examinations, comparing it to the Federal Reserve’s supervision of U.S. banks. In its June 12, 2026 announcement of the formal proposal, the department said the rule draws on approaches used by the Bank of England, the Banque de France, the Dutch central bank, Canada’s chief insurance regulator and the Monetary Authority of Singapore, as well as the International Association of Insurance Supervisors’ climate risk framework. Lara said in that release that resilience “is not optional, it is a global responsibility.”

The rule has been more than a year in development. The department published a workshop draft in October 2025 and held a public workshop that November, issued a formal notice of proposed action in June 2026, and held a virtual public hearing on July 28, 2026.

Industry groups pushed back during the process. As reported by InsuranceNewsNet, the American Property Casualty Insurance Association argued that property and casualty carriers write mostly short-duration business and plan on three- to five-year horizons, and that the $50 million threshold sweeps in far smaller companies than the NAIC’s Own Risk and Solvency Assessment (ORSA) and climate disclosure survey do. Other trade representatives, quoted by Digital Insurance, called projections out to 2040 or 2050 too speculative and said the reporting duplicates existing ORSA requirements. Consumer and environmental groups pressed from the other direction. A July 2026 coalition letter from 11 organizations, including United Policyholders, Public Citizen and the Greenlining Institute, urged standardized reporting, science-based emissions targets that extend to underwriting, and plans to keep insurers from withdrawing from markets they serve. The department’s announcement of the final rule says it builds on the June proposal, but the summaries available do not detail what changed in the final text.

For employers and policyholders, the rule does not change premiums, coverage terms or claims handling. Its significance lies in solvency oversight. It gives California regulators an early look at whether the carriers headquartered in the state, including those writing commercial and workers’ compensation coverage, have thought through threats that could erode their capital long before those threats show up on a balance sheet.