Climate Survey Uncertainty At NAIC Meeting

NU Online News Service, March 26, 11:00 a.m. EDT

DENVER–The May 1 deadline for insurers to complete a climate risk disclosure survey may now have to be delayed to June or July, a key regulator said.

Pennsylvania Insurance Commissioner Joel Ario, who chairs the National Association of Insurance Commissioners Climate Change and Global Warming Task Force, made his comments after a contentious session on the survey issue.

Some commissioners at the task force session during NAIC's spring meeting here said the plan for a survey should be scrapped altogether.

During the task force session a variety of possible actions on the survey were discussed following concerns raised in recent months by several states about the process of administering the survey.

Proposals included repealing the survey entirely; administering it but making it voluntary–where states can decide what form the survey takes and how to administer it; making the survey results confidential rather than publicly available; and staying the course.

The NAIC had previously decided to implement the survey for only the lead company from a given insurer group to avoid duplication. The state in which that lead insurer is domiciled would be responsible for administering the survey.

Industry members opposed to the survey planned to take their case to individual states after the NAIC approved the survey in March 2009, noting that the states retain ultimate authority to administer or ignore the survey.

Last year after one state said it would not administer the survey, Commissioner Ario said if an individual state chooses not to administer the survey to insurers, other regulators could obtain information about those carriers if they had subsidiaries located in their states.

During a January conference call, Commissioner Ario noted that some states objected to that idea.

At yesterday's meeting Connecticut Insurance Commissioner Thomas Sullivan said he felt it was a state's prerogative to decide whether or not to administer the survey to its insurer groups. He said allowing other states to administer it to those same insurer groups infringes on the lead state's prerogative.

Commissioner Ario noted that what is likely to happen is that the NAIC will go forward with its plan voted on in March 2009, and some states will administer the survey and make it mandatory, while others could choose to make the survey voluntary for insurers.

For states that choose the voluntary option, Commissioner Ario said it is not likely that other states would follow up with mandatory requirements for insurer groups that choose not to complete the survey, as contemplated in December 2009.

This coming August, Commissioner Ario said, regulators could assess the information they received and decide how to proceed from there.

Washington Insurance Commissioner Mike Kreidler indicated it is important for all states to administer the survey as it currently exists, even if they want to make it mandatory rather than voluntary.

After the meeting, Commissioner Ario said it is not typical for states to gain a 100 percent consensus on a model voted on by the NAIC, and said the organization typically does not vote on a whole new proposal if unanimity is not achieved. He said he is willing to reassess the survey process in August after states decide on their own how to proceed.

He noted the May 1 deadline for insurers to complete the survey may now have to be pushed back to June or July.

While Commissioner Ario said he does not believe there is still significant objection to making the survey results publicly available, David Kodama, director of policy analysis for the Property Casualty Insurers Association of America, said PCI still objects to states opting for a mandatory, public survey.

In comments to the task force, Mr. Kodama also said he would be interested in discussions regarding a re-vote on the survey entirely–one of the options put forward by Commissioner Ario at the beginning of the meeting.

Dave Snyder, American Insurance Association vice president and associate general counsel, said the survey represents a compromise between all interested parties and indicated he favors moving ahead with the survey as it stands.

For the states, Indiana has previously voiced its opposition to the survey. At the task force meeting, it was noted that Wisconsin and California have already moved forward with administering the agreed-upon mandatory survey, while New Jersey and Maryland indicated they would favor a voluntary survey. Washington and Pennsylvania both plan to administer a mandatory survey.