NU Online News Service

Insurance trade groups are seething over plans by regulators tomove ahead this weekend with a proposed rule requiring insurers tomake assessments of climate change impact on their customers andinvestment partners.

The draft regulation due for discussion by the NationalAssociation of Insurance Commissioners at their meeting Sunday inOrlando, Fla., embodies "a confrontational, destructive approach,"said David Snyder, American Insurance Association vice presidentand assistant general counsel.

In addition to the AIA, the proposal has drawn opposition fromthe Property Casualty Insurers Association of America (PCI) andNational Association of Mutual Insurance Companies (NAMIC).

Mr. Snyder said the regulation that is due for discussion wouldrequire insurers as part of their financial statements to makeassessments and disclosures about insureds, firms they invest inand investment partners, or face perjury charges.

He explained insurers would have to report publicly on theentities they assess without any protection against possible legalaction. Such a report, for example, might state that "Bank A orMunicipality B has particular climate risk exposure," he said.

This information, said Mr. Snyder, would be damaging to theindividual, business, non-profit organization or government unitbeing evaluated, and "they would be the first to sue the insurancecompanies for the very speculation that they are mandated todisclose."

Regulators who are concerned about the solvency of insurers areadopting a regulation that "undermines the very solvency they areconcerned about protecting," he added.

Mr. Snyder, who plans on making his argument at the NAIC AnnualSpring Meeting session of the Climate Change and Global WarmingTask Force, did seem hopeful about success.

He said he understood that commissioners want to make theregulation effective this year, and said that trade groups haveoffered alternatives to the regulations "that have been rejectedout of hand."

The issue of climate change exposure, he said, has beenill-defined, and it could involve large coastal areas and majormunicipalities threatened by water or storms. "The science isanything but clear," he said.

A statement from Robert Detlefsen, NAMIC's vice president forpublic policy, said that the proposal does "little more thanrubber-stamp the policy agenda of a small coalition of partisaninterest groups."

In his opinion, the "ultimate purpose is to coerce insurers intoaccepting the groups' questionable theories about the nature andeffects of global warming, and altering their behavior to conformto the groups' preferences."

The proposal, said Mr. Detlefsen, goes well beyond the voluntaryclimate risk disclosure promoted by non-governmental entities, suchas the Carbon Disclosure Project, and would be "an unprecedentedreporting burden."