1. A PERSPECTIVE ON INSURERS AND CLIMATE CHANGE Harrisburg, Pennsylvania November 6, 2008 David F. Snyder American Insurance Association 1130 Connecticut Avenue, NW Suite 1000 Washington, DC 20036 dsnyder@aiadc.org

2. While there seems to be broad consensus on some aspects of the climate change debate, there is little concrete consensus on what this means for insurers and insured risk. Example: Hurricane activity and severity.

3. There is no consensus within the insurance industry, regarding the effects, if any, of climate change on insured risks. Comments from some insurers should not be taken as a monolithic position.

4. Some insurers are responding to interest in climate change by offering “green” insurance products, such as “green” rebuilding and hybrid vehicle replacement options.

5. Insurers need to be able to send signals regarding comparative risk through rating and underwriting. New models are helping them do so. Regulators should not hinder the socially beneficial effects of risk-based prices.

6. Some insurers are offering information on “green” issues on their websites and some insurers are making disclosures of their carbon footprint. See the Carbon Disclosure Project website.

7. Insurers are stepping up their advocacy of responsible measures to reduce risk, including land use controls, stronger building codes, and alternatives to single occupancy vehicles.

8. The National Association of Insurance Commissioners (NAIC) held several hearings and approved a wide ranging white paper, that included sections on mitigation and disclosure. The white paper is generally acceptable, with some exceptions.

9. The NAIC is now proposing a set of compulsory public, sworn statements, not protected from litigation, that would compel insurers to speculate on the climate change exposure not just of themselves, but also of their investment partners and their customers, including companies, municipalities and non-profit organizations. We oppose this kind of disclosure.

10. The American Insurance Association (AIA) has offered an alternative proposal for the NAIC. NAIC serves as an information source using its website to list insurer “green” initiatives. NAIC provides some general questions for public disclosure under the MD&A. NAIC sets forth specific questions for confidential regulator-to-insurer discussion under the Risk- Based Surveillance Framework.

11. CONCLUSION There is no consensus yet on the relationship between climate change and insured risk. Nonetheless, insurers are working with their customers to offer new “green” products, acting responsibly as corporate citizens and increasing their public advocacy for such things as increased spending on public transit, land use and stronger building codes.

12. CONCLUSION At the same time, insurers are wary of over-reaction by regulators and efforts to create new litigation opportunities.