When the National Association of Insurance Commissioners decided it would require large insurance companies to publicly disclose the risks they face from climate change - and the steps they are taking to combat them - insurers across the country had every reason to believe they would make their first disclosures on May 1 this year, as agreed upon by state insurance commissioners.
Not so for Indiana's insurers. Or for insurers in several other states that seem to be following Indiana's lead.
The language of the NAIC's "Climate Risk Disclosure Survey" (see link information, below) had been hammered-out after intense negotiations, during which time the questions were significantly broadened and softened. Major industry groups had given their endorsement. The final version, stamped almost a year ago, was at the very least an important symbolic step toward acknowledging global warming and protecting insurance company clients and investors against everything from rising sea levels to drought.
Connecticut Insurance Commissioner Tom Sullivan, who publicly opposed what he called "rigid encroachment" by NAIC in regards to climate change, agreed to the final version of the survey, calling it "relatively benign."
It seemed an appropriate compromise, if somewhat toothless, had been reached.
Earlier this month, however, Indiana's acting insurance commissioner, Doug Webber, announced he would not require Indiana-based insurers to answer the eight-question survey - on grounds it served a "politically driven agenda," according to a New York Times
Since then, several other state commissioners have followed his lead and backed away from the survey as well.
At least two more states have abandoned the survey altogether. NUVO confirmed with state insurance commissions that Mississippi and North Carolina have joined Indiana. Meanwhile, Alabama, Connecticut and Utah told NUVO they were reconsidering it.
Created by state insurance regulators in 1871, the NAIC is responsible for coordinating insurance regulation among states. Its members include the insurance commissioners of each state; but as the moves by Indiana, Mississippi and North Carolina illustrate, its decisions are not binding.
The environment-as-point-of-political-leverage meme existed on both sides of the aisle long before "drill, baby, drill." But recent scandals, like the so-called "climategate," in which a British scientist was accused of exaggerating global-warming data, seem to have widened the rhetorical gap for politicians who would turn the issue into a political football - the actual science of the matter notwithstanding.
Brian Soden, professor of marine and atmospheric science at the University of Miami, and one of the lead authors on the groundbreaking 2007 report by the United Nations' International Panel on Climate Change, said there was "no debate about the reality of global warming among scientists actively working in this area." Mr. Soden delivered a lecture on climate change at Marian University in Indianapolis last month.
"Globally, we know the temperature is increasing on long time scales," he said. In Indiana, data indicate the climate will resemble the hotter, drier climate of Texas in the next 50 to 100 years. "It'll be one that generally experiences more frequent drought events, more frequent heavy rainfall events, more frequent heat waves, and less intense cold outbreaks."
Scientists not alone
Scientists aren't the only ones to acknowledge the dangers of climate change. The insurance industry has quietly acknowledged the risks posed to its companies, clients and investors for years.
In March, 2008, for example, Ernst and Young, a global analyst and consultancy group for the insurance industry, stated that "potential climate change is the greatest strategic risk currently facing the property/casualty insurance industry."
The federal government has done likewise, under Democratic and Republican administrations. Just last month, the federal Securities and Exchange Commission ruled it would provide "interpretive guidance" to companies on how to comply with existing disclosure requirements, as they relate specifically to climate change.
Though the SEC denied it was "weighing in" on the issue, the guidance report spends several, well-footnoted pages documenting state, national and international actions to combat greenhouse gases as a basis for its ruling.
Among them are major initiatives signed by the Bush Administration. The Energy Independence Act of 2007 enacted the first statutory increase in automobile fuel efficiency standards since 1975, in part, "to promote research on and deploy greenhouse gas capture and storage options."
More importantly, the Consolidated Appropriations Act of 2008 provided for rules requiring "mandatory reporting of greenhouse gas emissions [GHGs] above appropriate thresholds in all sectors of the economy of the United States." The bill cited a "growing scientific consensus that human activity is a substantial cause of greenhouse gas accumulation" and an acknowledged that GHGs "are causing average temperatures to rise at a rate outside the range of natural variability."
A dubious distinction
Indiana's new-found leadership role on the issue is a dubious distinction at best. The state's record on environmental issues hasn't been stellar in recent years. A Forbes study in late 2007 ranked Indiana second-to-last on its "greenest states" list. The study cited data from the American Lung Association, among others, and from a 2007 pollution study by U.S. PIRG, which ranked Indiana eighth-worst in air and water releases of dioxins, and fourteenth worst for land releases of recognized carcinogens, developmental toxicants, and reproductive toxicants.
Early reports indicated the decision to reject the survey had come at the behest of Republican Governor Mitch Daniels. An article published in The New York Times
online paraphrased Webber as saying that the governor's office had advised Mr. Webber against the regulation that "administering it might run counter to [the governor's] position against proposed federal legislation that aims to reduce the use of fossil fuels like coal by providing financial advantages to renewable power producers."
Indiana is the country's sixth-largest coal producer and uses coal-fired plants to produce over 95% of its electricity, according to the U.S. Energy Information Administration.
Jane Jankowski, the governor's press secretary, said those reports had "mischaracterized" the decision-making process.
"There was no directive," from the governor's office to reject the survey, Ms. Jankowski said. "The Department of Insurance made a decision that it would not require insurance companies to fill out the survey. The governor's office supported the position."
An insightful exercise
Still, some critics maintain that to administer the survey would mean implicitly acknowledging climate change as something to be taken seriously not the most politically marketable move in a coal-powered state.
Even more so, the steps insurers have already taken - if made public - could work further toward cementing public perception on climate change.
"When you've got to put your own dollars on the line and decipher the science, however [insurance companies] see fit, and come up with what they think is an appropriate strategy for them, I think that's a very insightful exercise," Mr. Soden said. "As a scientist, to me, that would be an interesting survey to see what people who have a direct financial stake in this feel about the confidence of where they're putting their money."
In an emailed statement to NUVO, Mr. Webber made no additional reference to politics. He explained that the Indiana Department of Insurance already requires insurance companies to "provide extensive financial and corporate information." He also characterized the survey as "too ambiguous" and of "negligible value in assisting the IDOI in performing its oversight responsibilities."
However, the IDOI would continue to participate in discussions, Mr. Webber added. He did not respond directly to a question regarding whether changes to the existing survey would suffice for Indiana to get back on board, or if the IDOI rejected the survey on a more fundamental level.
The link to the "Climate Risk Disclosure Survey" : www.naic.org/documents/committees_ex_climate_climate_risk_disclosure_survey.pdf