Posted on 03 Feb 2012
California, New York and Washington will require insurance companies to disclose how climate change may affect their businesses, effectively forcing most of the industry to address the issue, California's insurance commissioner said on Wednesday.
The three states will require any insurers that do business in their states to make climate change disclosures on a form developed by the National Assn. of Insurance Commissioners.
"Between the three states, our hope is to survey all companies in the United States with premiums in excess of $500 million," California Insurance Commissioner Dave Jones said in an interview.
The NAIC first adopted the climate change survey in March 2009, although states were allowed to make it voluntary and insurers were only required to file in the state where they were primarily licensed.
Compliance has been limited, and Mr. Jones said he believed the three states were the only ones administering the survey this year.
A coalition of public interest groups, Ceres, said last September that just one in eight insurers had a formal policy to manage climate risk, even though most acknowledged the potential problems climate change posed.
"The current approach to disclosure by just a handful of states was providing just a patchwork of information," said Andrew Logan, director of Ceres' insurance program, in an interview. "Any leadership on this was going to have to come from the states that understand the impact of climate change for consumers and insurers."
The survey asks, among other things, whether the company has a process for identifying and quantifying climate change risks and how it was attempting to manage those risks.
Last year was, by most accounts, the worst in the insurance industry's history for natural disaster losses. Insurers and reinsurers worldwide lost more than $100 billion on catastrophes, including earthquakes, hurricanes, tornadoes and flooding.
Insurers such as Allstate Corp. and Munich Reinsurance Co. have said there are fundamental climate changes taking place that will require the industry to be better prepared for future disasters.