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Insurance Regulators Aren't Warming Up to Global Warming

Every so often the ruling body of the U.S. insurance industry, the National Association of Insurance Commissioners (NAIC), has a good idea. But then they think better of it and reverse course. Such an idea was the Insurer Climate Risk Disclosure Survey that asked insurers about their efforts - or lack thereof - in dealing with climate change.

This is no lightweight matter. Greater minds than theirs are now looking into this issue at a conference in Copenhagen, Denmark which could lead to a global treaty on climate change. Insurers can play a major role in curbing global warming in two ways: either by choosing what to insure, such as clean power plants, or what to invest in.

Perhaps inspired by events in Copenhagen, Pennsylvania Insurance Commissioner Joel Ario, who heads the NAIC's Climate Change Task Force, showed he had a backbone, according to the National Underwriter. At this week's meeting of the NAIC in San Francisco Ario said in no uncertain terms that insurers "will be pursued" for climate risk data by other regulators even if the commissioner in their state of domicile doesn't ask for it.

That's important because insurers could have a close and all-too-comfortable relationship with their local regulator, or with the NAIC as a whole, which has been very proactive this year in passing feel-good rulings for the industry. But some commissioners are also proactive at protecting the public, and could demand the information if an insurer's subsidiary is located in their state, according to Ario.

His fighting words caught insurance associations off guard. Since they naturally tend to protect their clients, they oppose the survey and plan to "fight its implementation state-by-state."

But they needn't have worried. The next day Ario was singing a different aria. Again according to the National Underwriter he was now saying that insurers would be given "lots of leeway in responding" and he didn't expect insurers "to answer the questions in any specific way."

"The NAIC is only looking to make sure it gets responses, be they detailed or vague, from every insurer," he reportedly said.

What changed his tune? Probably the insurers or their associations chewed him out, a clear indication that they play the fiddle while the commissioners dance.

But what is clear is that "Going Green" means one thing in Copenhagen and another in San Francisco. To the NAIC, green is the color of money.

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