California requires insurers to plan for AI and climate risks

California Insurance Commissioner Ricardo Lara has finalized the Long-Term Solvency Planning Regulation, requiring insurers headquartered in the state to assess how emerging risks could affect their financial resilience. The framework covers AI, climate change, cybersecurity threats, technological disruption, and changing economic and financial conditions.

Covered companies must provide the California Department of Insurance with information about how those developments could affect their operations, investments, underwriting strategies, and financial strength. Insurers writing more than $50 million in direct annual premiums nationwide face enhanced requirements. The planning framework looks ahead to 2030, 2040, and 2050, giving regulators a longer-term view of potential vulnerabilities.

The regulation takes effect October 26, 2026. Covered insurers must assemble and make available their first long-term solvency plans to department examiners by January 1, 2028. The additional information is intended to help regulators identify financial concerns before they threaten policyholders or destabilize the insurance market.

The requirements supplement existing financial reviews and examinations rather than changing insurance policies, coverage, or consumer rates. Consumers do not need to take any action. The framework draws on international regulatory collaboration and planning approaches used by financial authorities in other markets.