While this is the beginning of a new year, old problems stillremain—some of which show no sign of being resolved anytime soon,including in the insurance industry.

Long-tail risks are a perfect example of how the past has a wayof creeping up when you least expect it. There are two long-tailrisks insurers should pay attention to in 2012 for the benefit ofthe industry and the global village.

First is climate change. An article a couple of weeks ago inThe New York Times titled, “Harsh Political Reality Slows Climate StudiesDespite Extreme Year,” examined how political pressure iskilling the financing needed to study climate change—and givedirection to determine what could help deal with the impendingfuture.

This past year was one of extreme weather events in the UnitedStates, say meteorologists and insurers. Events ranged from severe thunderstorms and tornadoesto drought stricken areas of the United States. Individually,experts say, these events are not unusual, but the fact that somany took place at the same time raises red flags.

To get down to understanding why this is happening takes moneyand manpower. The tools are there, but money isn't. It's being heldup by members of Congress who view finding rational answers to thecomplex issue as a propaganda campaign by the Obama administration,says the Times.

This shortsighted policy among global warming naysayers ishaving a detrimental effect on our society.

Starved of resources, the scientific community cannot answerfundamental questions that would ultimately help farmers growcrops; assist planners in locating projects in less risky places;help engineers design buildings to meet climatic threats andinsurers to adequately underwrite risk.

In 2012, the insurance industry community should make a boldstatement beyond the efforts of a few major reinsurers—such asLloyd's, Swiss Re and Munich Re to name a few. The industry needsto underwrite the efforts of science to come up with answers tothese issues.

Silence doesn't cut it. A loud, unified voice is needed from thebusiness community with a real stake in the effects of a changingclimate.

One suggestion is that the industry use its political clout andnudge legislators to lift their opposition to funding research, notjust for the good of the nation, but also for the good of thebusiness sector.

Then there is the perennial dogfight over regulation. Inparticular, what exactly should be the job be of the FederalInsurance Office.

Industry lobbyists have fought tooth and nailto limit the power of the office. No one in the industry has aninterest in living with a strong federal regulator of insurance.Some, in fact, would prefer gutting any action by the federalgovernment that has anything to do with insurance.

There is validity to the argument that a one-size-fits-allapproach to insurance regulation would be a nauseating burden onthe industry. I can't imagine the feds regulating auto orhomeowners insurance, nor do I think they want that headache.

However, insurers want efficiency in reporting, licensing andinterstate regulation. For all the good work and efforts of theNational Association of Insurance Commissioners, the reality isthat a single commissioner cannot institute all the reforms themajority of commissioners agree to without his or her home statelegislative body agreeing to it. Then there are the parochialinterests of individual regulators and states that trump the commoninterest.

The lack of a cohesive regulatory element, with teeth, toenforce decision making is the single stumbling block to interstateefficiency.

Want an example? I'll give you two—NARAB (National Associationof Registered Agents and Brokers) which still has not beenuniversally implemented to allow agent's licenses recognized inevery state.

The other is the Nonadmitted and Reinsurance Reform Act aimed atmaking doing business a whole lot easier for the surplus linesindustry. Payment of taxes and regulatory issues would be handledby the wholesaler's home state.

This is a simple idea, but the only problem is states havedifferent interpretations about what they are supposed to be doingunder the law. Some collect, but don't share the tax. Othersbelieve they are to collect the tax, but still have domain overregulating all wholesalers in their states.

In other instances, instead of one system for collection anddistribution of tax, states are banding together under differentaffiliations and systems of collection and distribute of taxes.

Then you have the wholesalers who say their interpretation ofthe law is that they are only beholden to the regulator of theirhome state.

At least a federal referee (let's use that term instead ofregulator) would be able to iron out the differences and lay outrules for everyone.

It is said that madness is doing the same thing over and overand expecting a different result. Let 2012 be the year of adifferent approach—and different results.