Connecticut Requires Insurers To Explain Climate Risk Policies

by Categorized: Uncategorized Date:

More than 100 insurance companies that do business in Connecticut are now required to explain how they manage the risk of climate change in a wide-ranging survey that asks about insurers’ investment portfolios, customer outreach and plans to assess and reduce emissions.

The new requirement was announced Wednesday by Connecticut Insurance Commissioner Thomas B. Leonardi, head of the state Insurance Department which regulates the industry.

“As regulators, it is important that we identify those climate-related factors that can affect the marketplace and in particular the availability and cost of insurance,” Leonardi said in a prepared statement. “These surveys give us another window into the industry’s risk management practices as they relate to changing weather patterns. This is also a transparent process and the surveys will be made available to the public.”

The survey will put insurance companies in a public spotlight with regard to their investments, their in-house environmental strategies and whether they engage consumers about risks related to climate change. It also could be a catalyst for a broad public dialogue about the increasing frequency of hurricanes, tornadoes, wildfires, hailstorms, severe thunderstorms, droughts, heat waves and other erratic weather.

All insurers that write at least $100 million in annual premiums in Connecticut must fill out a survey of eight questions by Aug. 30. That’s about 110 companies, according to the state Insurance Department. Health insurers and life insurance companies also have to comply with the survey, not just property-casualty insurers that offer homeowners’ and commercial property policies.

Some insurers have been more outspoken than others about linking climate change with the staggering costs of natural disasters. The Hartford Financial Services Group and Munich Reinsurance America Inc. have made public statements about climate change and its affect on the insurance industry.

“The Hartford has long recognized that climate change is a very real risk, not only to insurance companies but to our policyholders, businesses and the overall economy,” company spokesman Thomas Hambrick said in a prepared statement. “We fully support the Connecticut department’s focus on this important issue and have completed the Climate Risk Survey in prior years.”

Last year, natural disasters cost insurance companies about $58 billion, which is the second-most expensive year ever in the U.S. after 2005, when the Gulf Coast was ravaged by hurricanes Katrina and Rita. Storm Sandy accounted for more than $25 billion, or 43 percent of the year’s total, in insurance claims on damaged homes, cars and businesses, according to a report released in January by Munich Re.

Aetna spokeswoman Susan Millerick said the Hartford-based health insurer promotes sustainable practices nationally and internationally.

“We are committed to limiting our own environmental impact by reducing our energy consumption, conserving environmental resources, and adopting a sustainable approach to the management and maintenance of all real estate and business processes wherever possible,” Millerick said in a prepared statement.

Four other states besides Connecticut have the same requirement: California, Minnesota, New York and Washington. The five states are collaborating to allow insurers to have one set of answers for the questionnaire which will satisfy requirements by insurers in all the participating states.

California was first to require answers to the survey in 2009, when it was adopted as a voluntary report by the National Association of Insurance Commissioners. As a result, many insurers doing business in Connecticut are already required to complete the survey for other insurance regulators in other states.

Answers will be available on the website of California’s insurance regulatory authority. Visitors to the Connecticut Insurance Department site will be redirected to the California site.

The survey asks insurers if they have a plan to assess, reduce or mitigate emissions from operations, and why or why not, whether insurers have a climate change policy with respect to risk management and managing their investment portfolio and what insurers do to encourage their customers to reduce losses caused by “climate change-influenced events.”

An insurance premium, at its core is a signal of risk, said Robert Hartwig, an economist and president of the Insurance Information Institute, a property-casualty trade group and research entity. As long as the price of a homeowner’s insurance premium is allowed by state laws to be actuarially accurate, then the premium itself will indicate to consumers the risk of living in a particular home in a particular place.

Insurers help customers mitigate risk to climate change by offering discounts on homeowner’s insurance for certain home designs, roof designs and other factors, Hartwig said.

“Insurers are also very strong supporters of building codes, and they always have been, but when it comes to such things as land-use policies, those are beyond insurers’ control,” Hartwig said. “If a coastal community in Connecticut allows a thousand condominiums to go up on the beach, insurers have no say in that. All an insurer can do in that instance is charge a premium that reflects the risk.”

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

The Courant is using Facebook comments on stories. To comment on articles, sign into Facebook and enter your comment in the field below. Comments will appear in your Facebook News Feed unless you choose otherwise. To report spam or abuse, click the X next to the comment. For guidelines on commenting, click here.