As a core part of our business, we continually monitor, assess and respond to the risks and opportunities posed by changing climate conditions to provide products and services that both help our customers mitigate associated risks and are priced to meet our long-term financial objectives. We also regularly consider new insurance products and services that could be useful to our customers in addressing climate-related risks. This section introduces our approach to managing changing climate conditions, which we expand on in a detailed report that aligns with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). To read about environmental efforts within our operations, refer to the Eco-Efficient Operations section.
Board Oversight and Governance
Our Board of Directors and its Risk Committee consider changing climate conditions as part of, and integral to, overseeing our business and operations. The Board of Directors plays an important role in overseeing our Enterprise Risk Management (ERM) practices and strategies, including our company’s evaluation of potential risks relating to changing climate conditions. The Risk Committee of the Board, composed of independent directors, is responsible for oversight of the strategies, processes and controls relating to risks in our business operations, including insurance underwriting and claims, reinsurance, catastrophe exposure and the impact of changing climate conditions on those operations. The Risk Committee assists the Board in overseeing the operational activities of our company and the identification and review of risks that could have a material impact on Travelers, including risks relating to changing climate conditions. The Risk Committee meets on a quarterly basis with the Chief Risk Officer, Chief Underwriting Officer, members of the Enterprise Risk Committee and, as appropriate, other members of senior management to discuss risks that could have a material impact on Travelers, including risks relating to changing climate conditions. These discussions include, for example, information regarding historical loss experience, loss trend projections, lessons learned from recent catastrophe events, underwriting practices and market share analyses. These discussions inform, among other things, the company’s financial plan, risk appetite and underwriting approach. The Risk Committee, in turn, reports to the full Board with regard to its discussions.
In addition to the Risk Committee, our management-level enterprise risk and underwriting risk committees are key elements of our ERM structure and help establish and reinforce our strong culture of risk management, including with respect to changing climate conditions. A senior executive team, which includes the Chief Risk Officer and the Chief Underwriting Officer, oversees the ERM process. We also have other business-level risk committees that meet multiple times a year with senior management to discuss potential risks to Travelers related to the environment and changing climate conditions. These committees include the Enterprise Risk Committee, the Enterprise Catastrophe Committee, the Emerging Issues Committee and the Climate, Energy and the Environment Committee (CEEC).
The CEEC coordinates and supports climate-related initiatives and strategies across Travelers and is a venue to share information and leverage expertise. The CEEC has four subgroups, each led by senior staff and aligned with a key area of focus:
- Risk Identification and Management. Supports business activities to identify, monitor and assess climate-related risks. Participants include representatives from our Enterprise Risk Management function (which includes the ERM group, Catastrophe Risk Management, and Enterprise Underwriting). Representatives from Investments, Government Relations, Legal, Risk Control, Claim, the Global Renewable Energy Practice and business underwriting groups across the company also participate in this subgroup.
- Products, Market Development and Customer Services. Supports activities to identify and develop product opportunities, explore potential new markets and expand services to help customers prepare for and respond to potential risks related to changing climate and “green” trends. Participants include Business Insurance Underwriting and Product, Enterprise Underwriting, Risk Control, Claim, the Global Renewable Energy Practice and employees from across our business units.
- External Relations, Communications and Industry Leadership. Supports Travelers external-facing corporate groups on matters pertaining to climate, energy and the environment. Participants include the Travelers Institute, Government Relations, Corporate Communications, Catastrophe Risk Management, Enterprise Underwriting, Risk Control, Community Relations and Investor Relations.
- Facilities and Operations Management. Coordinates Travelers initiatives and activities to develop and implement environmentally responsible corporate practices, including establishing emission reduction goals and monitoring progress in achieving those goals. Participants include members of the Travelers Corporate Real Estate team, along with key members of the facility management teams of our outsourced service provider.
Travelers provides detailed climate-related disclosures through voluntary reporting, such as our TCFD Report, as well as mandatory submissions, such as those required by the National Association of Insurance Commissioners (NAIC). In 2021, the NAIC again allowed insurers, including Travelers, to submit a TCFD Report in lieu of completing the NAIC Insurer Climate Risk Disclosure Survey. The NAIC began accepting a TCFD Report in lieu of a completed NAIC survey in 2020. Readers are encouraged to review our TCFD Report to gain a more complete understanding of our approach to addressing the risks and opportunities related to changing climate conditions.