California Finalizes Long-Term Solvency Requirements for Insurers
California insurers will be required to assess how climate risks, artificial intelligence, cyber threats and other challenges could affect their financial strength over the coming decades.
California Insurance Commissioner Ricardo Lara has finalized the Long-Term Solvency Planning Regulation, which also places enhanced requirements on companies writing more than $50 million in direct annual premiums nationwide.
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Insurers are required to evaluate potential effects on their operations, investments and underwriting strategies, including risks and opportunities from technological disruption, then they must provide the California Department of Insurance with information about how they are analyzing and preparing for those risks.
The additional information is intended to help the department identify vulnerabilities sooner and address financial concerns, according to the CDI.
The framework draws on guidance from the International Association of Insurance Supervisors.