INDIANAPOLIS (March 27, 2008) – A proposal ostensibly designed to ensure that insurers are adequately addressing issues of climate change serves no purpose other than to appeal to special interest groups, according to the National Association of Mutual Insurance Companies (NAMIC). NAMIC’s comments came three days before the National Association of Insurance Commissioners is scheduled to discuss the plan at its upcoming quarterly meeting in Orlando, Fla., March 29-31.
The NAIC’s Climate Change and Global Warming Task Force issued the draft proposal calling for insurers to include in their annual financial statements their assessments of climate change and their response.
“The task force has done little more than rubber stamp the policy agenda of a small coalition of partisan interest groups,” said Robert Detlefsen, NAMIC’s vice president, public policy. “That agenda would compel every U.S.-domiciled insurance company to provide answers to a set of highly tendentious questions whose 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.”
Detlefsen said the proposal goes well beyond the voluntary climate risk disclosure promoted by non-governmental entities, such as the Carbon Disclosure Project, as well as the mandatory financial risk disclosure required of publicly held companies by the U.S. Securities and Exchange Commission. It would, he said, constitute an unprecedented reporting burden on hundreds of companies.
“None of the existing risk disclosure mechanisms, whether voluntary or compulsory, is intended to apply to non-public companies,” Detlefsen said. “Within the insurance industry, non-public companies include the hundreds of mutual insurers that constitute the bulk of NAMIC’s membership. It is thus disingenuous for the task force to suggest that its Climate Risk Disclosure Proposal represents an attempt to ease the climate risk disclosure reporting burden for insurers by developing a reporting framework that synthesizes various existing reporting mechanisms, since none of these mechanisms is mandatory with respect to climate risk, and none is meant to apply to the sizable segment of the insurance industry that is non-publicly owned.”
Detlefsen also noted that the proposed interrogatories “assume that insurers have knowledge of things that are in fact unknowable.” While many property/casualty insurers face challenges and uncertainties due to the risk posed by large-scale natural disasters, no company is in a position to assess the risk posed by climate change per se, he said. “Given the current state of climate science, insurers can do no more than speculate about the nature and extent of risks attributable to climate change.”
The proposal does not offer any explanation of how it would benefit insurance consumers, Detlefsen added. “Lacking this rationale, the proposal has no legitimate basis as an insurance regulatory initiative,” he said. “To say that we regard the task force’s Climate Risk Disclosure Proposal as a colossal disappointment would be an understatement.”
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Posted: Thursday, March 27, 2008 12:00:00 AM. Modified: Thursday, March 27, 2008 12:00:42 PM.
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