SAN FRANCISCO–A panel of the nation's insurance commissioners meeting here Saturday voted to adopt a controversial white paper that sets what one key regulator said is a “baseline” for insurance industry and regulator action on climate change issues.

Insurance trade groups, who at previous sessions of the National Association of Insurance Commissioners have blasted the project as unwarranted, intrusive and the groundwork for a legal fiasco, were largely silent as the NAIC accepted a paper that included changes the groups objected to at a Friday session.

While property-casualty insurers are upset over the document, a life insurance trade organization said Friday it was happy with the way regulators have modified plans to ask climate change questions in a proposed supplement to the Annual Statement required of insurers.

Among the latest changes included in the white paper on “The Potential Impacts of Climate Change on Insurance Regulation” was a provision offered by consumer representative Dan Schwarcz, a University of Minnesota law professor, encouraging the use of mileage-weighted insurance.

The language, as unanimously adopted by the NAIC Climate Change and Global Warming Task Force, states in part that insurers “can further encourage reduction of greenhouse gas emissions as well as exposure to loss, by providing incentives for consumers to drive less. A most effective way to do so would be to give much greater weight to the miles that policyholders drive as a rating factor.”

“Insurers can measure the amount that their policyholders drive in a variety of ways. Indeed, at least one insurer (Progressive) already makes use of GPS technology for some policyholders.” The paper also mentions that pay-as-you drive insurance is available in Europe, Israel and Asia, and that the insurance carrier Travelers offers a discount to hybrid car owners.

Wisconsin Insurance Commissioner Sean Dilweg, the task force chairman, said the white paper provides a baseline and told the panel it was “important to move ahead on adoption.”

The white paper concludes that regulators need to ask insurers about climate risk in their internal risk assessment process, how they inform and provide incentives for policyholders to deal with climate risk, how insurers' boards are informed on climate risk, and what steps insurers are taking to mitigate their own and policyholders' climate risks. It calls for convening an NAIC summit on climate change.

Connecticut Commissioner Thomas Sullivan wondered aloud about making disclosure the focal point of conclusions, asking, “What about other issues?” Mr. Dilweg replied that the white paper contains a “landscape look” at the issues.

Dave Snyder, American Insurance Association vice president and assistant general counsel, said the group endorses efforts to reduce greenhouse gases but that science clearly relating the impact of climate change to the insurance industry is at issue.

Before the vote he urged the task force not to give greater weight to insurance based on miles driven as a rating factor.

Mr. Dilweg said the task force will take written comments until June 30 on its proposals for climate change questions and would be a separate part of the Annual Statement. He noted Friday that there has been some industry agreement and some opposition and he would like to get both sides to the table for discussion.

In July, he said the task force will assess the possibility of adopting such disclosure requirements by September.

Rather than sworn responses to interrogatories, the NAIC now proposes to have insurers answer climate change impact questions as part of a forward-looking managerial discussion and analysis.

Michael Monahan, director of accounting policy for the American Council of Life Insurers, said Friday that his organization had been surprised to find life and health insurers mentioned in the white paper. He called the removal of climate questions from the sworn interrogatories a “huge victory for the industry.” Life insurers in the white paper are advised to prepare for climate change impact on their real estate investments.

But Mr. Snyder of AIA and Rey Becker of the Property Casualty Insurers Association of America saw no triumph for the industry in the task force action. PCI and AIA said they believe any management responses on underwriting questions, in addition to revealing trade secrets, could be the basis for policyholder lawsuits if insurers disclosed they were not writing or canceling coverage based on climate change.

Neil Alldredge, vice president of state and regulatory affairs for the National Association of Mutual Insurance Companies, noted that the white paper references no climate science and wondered how insurers could make assessments on the impact of climate change on their business when scientists are in disagreement on the topic.

Mr. Becker said before Saturday's vote that the NAIC's climate change activity was “social engineering” and wondered how it was the business of insurance regulators to involve themselves with environmental practices.

Among other points covered in the 749 lines of white paper text, the document notes that insurers can provide discounts for use of “green” building items in construction and reconstruction after loss.

The paper says states should strongly consider catastrophe reserving as a means to encourage “sound enterprise risk management to help ensure adequate capital is available for catastrophic loss potential impacted by climate change.”

At the full plenary session of all the commissioners today the white paper was adopted.

(This story was update at 4:07 p.m.)

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