Insurer Groups Band Together to Battle NAIC Climate Plan

NU Online News Service

Insurance trade groups are seething over plans by regulators to move ahead this weekend with a proposed rule requiring insurers to make assessments of climate change impact on their customers and investment partners.

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

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

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

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

This information, said Mr. Snyder, would be damaging to the individual, business, non-profit organization or government unit being evaluated, and "they would be the first to sue the insurance companies for the very speculation that they are mandated to disclose."

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

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

He said he understood that commissioners want to make the regulation effective this year, and said that trade groups have offered alternatives to the regulations "that have been rejected out of hand."

The issue of climate change exposure, he said, has been ill-defined, and it could involve large coastal areas and major municipalities threatened by water or storms. "The science is anything but clear," he said.

A statement from Robert Detlefsen, NAMIC's vice president for public policy, said that the proposal does "little more than rubber-stamp the policy agenda of a small coalition of partisan interest groups."

In his opinion, the "ultimate purpose is to coerce insurers into accepting the groups' questionable theories about the nature and effects of global warming, and altering their behavior to conform to the groups' preferences."

The proposal, said Mr. Detlefsen, goes well beyond the voluntary climate risk disclosure promoted by non-governmental entities, such as the Carbon Disclosure Project, and would be "an unprecedented reporting burden."