Climate Change and Global Warming (EX) Task Force
February 28, 2008
March 30, 2008

The Climate Change and Global Warming (EX) Task Force met on Thursday, February 28, 2008, for an interim meeting in Kansas City, Missouri.

During this interim meeting, the Task Force:

• Reviewed the comments and suggested edits and implemented edits to the draft “The Potential Impact of Climate Change on Insurance Regulation” report. The Task Force heard from representatives from Ceres, the Center for Economic Justice, and the Rockerfeller Family Fund, the National Association of Mutual Insurance Companies (NAMIC), the Reinsurance Association of America (RAA), the American Insurance Association (AIA) and the Property Casualty Insurers Association of America (PCI).

Editorial topics included discussion on:

• Changing the title and thesis statement to better reflect the scope of the paper;
• The scope, and whether it should be based on regulatory issues or broadened to reflect the overall impact of climate change;
• Broadening the paper to include the impact of climate change to life and other non-P&C insurance coverage or disclosing them separately;
• The relationship between climate change and catastrophes;
• The impact of climate models on catastrophe models;
• Replacing the reference to global warming with global climate change to reflect that climate change encompasses more than just a warming trend; and
• Transparency of catastrophe model assumptions to ensure a clear link with proposed rate increases.

Additionally, the Climate Risk Disclosure (EX) Working Group was formed to address two tasks: 1) complete the editing of the white paper--The Potential Impact of Climate Change on Insurance Regulation and 2) review initial comments received on our recently released draft disclosure proposal.

• Received a presentation from Henry Fox (Fox Consulting) providing an update on the development of climate trend data. He discussed his research on historical weather trends in separate weather zones throughout the U.S. over a 50 year period in an effort to forecast future weather trends. His patented forecasting methods are unique in that they place a heavier weighting on more recent years. His findings suggest that some zones show increases in average temperature or rainfall while other zones show decreases. He did not believe his findings support the overall global warming theories. He suggested that his work could be used by the insurance industry and American businesses to better understand long term weather-related risks in the weather zones examined.

• Commissioner Dilweg presented a draft proposal for climate risk disclosure. The proposal is meant to be a starting point for discussion regarding new interrogatories. The intended object of the proposal is to facilitate disclosure in 2008 with refinement in future years as needed. Developed by investor, state pension and other organizations, the framework of the proposal encourages standardized climate risk disclosure to make it easy for companies to provide information.

Climate Change and Global Warming (EX) Task Force also met on Sunday, March 30, 2008, at the Spring National Meeting in Orlando, Florida.

During the National Meeting, the Task Force:

• Received Interim Meeting Report.
• Received a report from the Climate Risk Disclosure (EX) Working Group on its revised draft “The Potential Impact of Climate Change on Insurance Regulation” report. The white paper will be exposed for comment for a 30 day period, ending April 30, 2008.
• Heard panel discussions on the draft “Climate Risk Disclosure Proposal”. Panel one consisted of representatives from insurer trade associations NAMIC, RAA, AIA and PCI. Panel two consisted of consumer representatives from Ceres, the Center for Economic Justice, and the Rockerfeller Family Fund.

Discussion topics from insurer trade associations included:

• Shifting insurer disclosure of climate risk from interrogatories to other reporting areas like the Management and Discussion Analysis (MD&A) or the NAIC’s Risk Surveillance Framework;
• The legal ramifications of a mandatory reporting interrogatory versus other reporting options like the MD&A;
• The difficulty of assessing and quantifying the risk climate change poses given its long-term impact and infancy of the tools and science surrounding the issue;
• The risk to affordability and availability in coastal areas that could result if insurers are asked to incorporate climate risk pricing;
• The appropriateness of several of the questions within the draft “Climate Risk Disclosure Proposal”;
• The need to identify the specific climate related risks to insurers through means such as a survey;
• Given the infancy of the issue, the need for more general oriented reporting questions.

Discussion topics from consumer representatives included:

• The low response rate of current public disclosure from domestic insurers, illustrating the need for disclosure;
• The need for substantive, public, and uniform disclosure domestically and globally;
• The need for more transparency so that investors and regulators can better identify risks;
• The need to enact long-term climate risk solutions now to mitigate against future litigation and ensure availability and affordability.

Action Items:

1. Received “Climate Risk Disclosure Proposal” and exposed it for additional written comments, ending April 15, 2008.
2. Established and appointed members to a new Climate Risk Disclosure (EX) Working Group.
3. Received the report of the Climate Risk Disclosure (EX) Working Group.
4. Received revised draft “The Potential Impact of Climate Change on Insurance Regulation” report and exposed it for a 30 day comment period, ending April 30, 2008.