AIA Sees NAIC’s Climate Change Proposal as Creating Conflict
The American Insurance Association (AIA) today said a climate change-related proposal by the National Association of Insurance Commissioners (NAIC) would create unnecessary friction and unproductive controversy between regulators and insurers, and divert attention and resources from possible areas of cooperation to reduce greenhouse gases.
The NAIC Climate Change and Global Warming Task Force recently issued a draft proposal calling for specific financial disclosures of an insurer’s assessment of climate change impact and the insurer’s response, despite the fact that the effects of climate change on insurers are anything but clear. This draft is expected to be discussed at the upcoming NAIC meeting March 29-31 in Orlando, FL.
“The NAIC proposal is in line with efforts of special interest groups who want insurers to speculate on climate and weather changes that are highly uncertain, and thus, these disclosures appear to be aimed only at setting up a platform and record for potential litigation,” said David Snyder, AIA vice president and assistant general counsel.
The proposal calls for the disclosure to be made in an insurance company’s annual financial statement. “Fundamentally, climate change predictions lack the precision that is associated with an insurers’ annual statement,” Snyder continued. “Other aspects of the proposal appear to address issues that are immaterial to insurers’ financial condition and request information that is either already available or irrelevant to insurers’ operations.”
AIA urges the NAIC to reject the proposal for climate risk disclosure, and instead turn to the financial risk assessment tools that regulators already have for identifying and evaluating various risks, potentially including climate change risk.
“U.S. property-casualty insurers are increasingly engaged in efforts to address climate change risks by reviewing there own carbon footprints, encouraging the use of green technology, supporting eco-friendly practices, and engaging in other proactive initiatives,” Snyder said. “The property-casualty insurance industry has always played an important societal role by insuring weather-related risks and helping communities better manage these risks through stronger building codes and better land use decision-making. We urge the NAIC to join us in these efforts.”
Source: Source: AIA Press Release | Published on March 27, 2008
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