NU Online News Service

DENVER--Insurance regulators, in a surprise move, havevoted to let insurers file their climate risk disclosure surveyresponses on a voluntary, confidential basis.

The new plan, which passed at a plenary session of the NationalAssociation of Insurance Commissioners by a narrow vote, was notdisclosed to the public before it came up for a vote.

Called "version three," the revised survey filing concept wasapproved only after a prolonged debate. It passed on a 27-22 voteduring the NAIC's joint Executive Committee/Plenary session at theassociation's Spring National Meeting held here.

This new version replaces the survey structure voted on by theNAIC in March 2009.

Immediately following the vote, some confusion remained amongregulators as to when the new plan was formally drafted and whatexactly it entailed.

The plan has since been made available on the NAIC Web site athttp://www.naic.org/meetings_home.htm.

According to the posted plan, the survey questions themselvesremain unchanged. But language is added to specify that requirementfor completing the survey is at the discretion of each state, andthat responses are confidential.

Participating states, explains the survey, will coordinate withthe NAIC to develop a public report giving information in theaggregate regarding insurer responses.

While a chart remains in the survey stating that disclosure ismandatory for insurer groups with premium over $500 million for2009 and $300 million for 2010 and thereafter, language is addednoting that the chart is a "suggested guideline."

Additional language also now specifies that the questions do not"endorse, reject or otherwise express an opinion on the existenceor absence of climate change," and that the survey will not be usedfor any purpose relating to regulatory consideration of a proposedrate change.

References to providing the information to the public andshareholders are also stricken.

Following the plenary vote, regulators could not say whereversion three had been drafted, but they said it was the result ofroughly two months of discussions.

South Carolina Insurance Commissioner Scott Richardson--who madethe motion at plenary to replace the original survey with the newplan--and other regulators, said they believed version three camefrom Thursday's Climate Change and Global Warming Task Forcemeeting.

But while the chair of that task force, Pennsylvania InsuranceCommissioner Joel Ario, had noted on Thursday that regulators werediscussing several alternatives to the original surveyversion--including making the survey voluntary or confidential--thetask force did not vote or otherwise take action to present anyformal alternatives.

Commissioner Ario said immediately after the Plenary vote thathe was unsure what version three would look like once published. "Idid not see the document that's today labeled 'version three,'" hesaid.

"I think it's not good public process to be adopting somethingthat no one's seen," he said.

He added that there had been discussions of alternatives, butthat those discussions were general and that various wording hadbeen used.

Commissioner Ario said he presented regulators with options.Version two, he said, was to make the survey voluntary instead ofmandatory. Version three, he continued, was to make the surveyconfidential. But, he explained, what was not answered was whetherversion three was mandatory and confidential, or voluntary andconfidential.

Additionally, he said it was unclear whether it was up toindividual states to decide whether a domiciled insurer's surveywould be voluntary, or for companies themselves to make thatdecision.

"That's exactly the detail that's not been clarified, so I don'tknow if that's true or not," he said.

In the debate leading up to the plenary vote, CommissionerRichardson and Ohio Insurance Director Mary Jo Hudson contendedthat it was never clear that regulators had voted in favor of amandatory, public survey in March 2009. They said they had votedfor a survey, but that they were under the impression the taskforce would come back with more details about how it would beadministered.

A reading of the March 2009 minutes revealed the vote hadapproved the original version of the survey, but some regulatorscontended that proper discussions never took place.

"[The March 2009 vote to approve the survey] was done in anagenda vote," Director Hudson said after yesterday's meeting. "Itwas never fully discussed by the plenary."

Commissioner Ario said ultimately the vote does not change thesituation for regulators.

Before the vote, he said, the "presumption was [regulators]could do a mandatory survey and states could diverge from it. Nowthere's a confidential survey, and states can diverge from it."

Illinois Insurance Director Michael McRaith said he still plansto administer the mandatory, public survey in his state, as wasoriginally agreed.

"The net effect of today's vote is zero," he said, noting thatstates that were going to administer a mandatory survey will stilldo so.

"We're not gong to live in a hamster wheel reconsidering everyvote just because somebody disagrees with it," he said. "We'regoing to move forward; we made the decision a long time ago."

Commissioner Ario said he will consult with other states and, astask force chair, will try to make the confidential survey voted onyesterday work for as many states as possible. He said he wasunsure at this point whether his state will go forward with themandatory survey or the voluntary, confidential one.

Insurance industry representatives who had opposed themandatory, public survey said they were pleased with the outcome,if not the process.

Bob Detlefsen, vice president of public policy at the NationalAssociation of Mutual Insurance Companies (NAMIC), said he had beenfollowing the proceedings closely and had not seen version threebefore it was voted on. He wondered if there was a document of theplan available before Thursday's task force meeting, and if so, whyit was not made available to the public then.

Regarding the effect of the vote, Mr. Detlefsen noted thatbefore the vote, states choosing to administer a voluntary surveywould have been seen as going against official NAIC policy, whereasnow, states doing a mandatory survey will be the ones breakingranks with what the NAIC voted on.

David Kodama, director of policy analysis for the PropertyCasualty Insurers Association of America, said PCI's plan hadalways been to address concerns individually with states, sinceeach state retains the authority to decide its course of action.That strategy still applies after yesterday's vote, he said.