Three States to Require Insurers to Disclose Climate-Change Response Plans - New York Times

February 1, 2012
By FELICITY BARRINGER

EXCERPTS:

Insurance commissioners in California, New York and Washington State will require that companies disclose how they intend to respond to the risks their businesses and customers face from increasingly severe storms and wildfires, rising sea levels and other consequences of climate change, California’s commissioner said Wednesday.

 “Our goal is to have the most complete, best and accurate information possible for investors, the insurance industry, regulators and the broader public.”

Last year’s level of natural disasters was unprecedented, according to an August report by the A. M. Best Company, which rates the financial strength of insurers. By late June, the estimated $27 billion in losses suffered by the American industry exceeded the 2010 total.

The disclosure survey will be mandatory for companies writing policies worth more than $300 million nationwide. It was created by Ceres, a Boston-based nonprofit group that leads a coalition of investors and environmental groups in gathering information about business responses to climate change, and prods them to do more.

Robert Hartwig, president and economist at the Insurance Information Institute, an industry trade group,.... He added, “If insurers have shown anything over the course of the centuries in which they have oared it is that they are capable of managing changes in the weather on both the micro and the macro scale.”

Roughly 25 percent of the industry’s large property, casualty and life insurance companies participated in an earlier version of the survey sent out by California and five other states last year. A rule change, combined with California’s partnership with New York and Washington, will mean that 300 of the larger insurers will have to comply. Companies that do not complete the survey could face fines, although it is highly unusual for companies to ignore such directives.

The survey’s contents, Mr. Logan said, “are pretty basic. What the regulators are trying to get a sense of is whether companies have thought about the cost implications for their businesses.”

He added: “The big takeaway from the survey last year is that there is a high level of concern among insurers about the impacts of climate change that is not matched by concrete plans to deal with those impacts. There is a real gap between the risk that’s been identified and plans to address it.” Eleven of the 88 companies surveyed last year, he said, reported having formal policies to manage climate change.

Another group that might benefit from such disclosures, said California’s insurance commissioner, Mr. Jones, are investors in the insurance industry.

“If we feel insurance or energy companies are not incorporating climate risk into their analyses and their boards of directors are not recognizing it,” he said, “that failure to do so endangers the value of that investment.” The result, he said, would not be disinvestment but “engagement with those companies,” because “they are not caretaking their business very well.”

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