As reported in the P&C National Underwriter, while world leaders were congregating in Copenhagen to discuss global warming, insurers attended the Climate Risk Summit in San Francisco, CA, sponsored by the National Association of Insurance Commissioners (“NAIC”).  At this forum, insurers discussed a variety of products and initiatives which their insurance companies have offered consumers to address the risks accompanying global warming.  In particular, Stephen Bushnell, product director at Fireman’s Fund Insurance Company, discussed products which his company has designed to reduce carbon dioxide emissions.  Such products include coverage for certified green buildings as well as coverage for green products used by manufacturers and automakers.  

Lindene Patton, climate product officer at Zurich Insurance, argued that in order for the insurance industry to reduce the risks associated with climate change, carriers must be allowed to price according to the risks they assume.  In particular, she argued that “[n]o amount of insurance will make a poor project/site/product/operation good . . . Policymakers should engage insurance industry expertise and capital to most efficiently adapt to, and mitigate the risks of climate change.”  She stated that insurers must be permitted to "send risk-based price signals" and that spreading/masking risk through the use of government indemnity funds "may inadvertently increase moral hazard and overall risk."

Panelists at the forum also discussed pay-as-you-drive (PAYD) insurance, where premiums are based on the total miles driven by the insured, as a way to decrease carbon dioxide emitted from automobiles.  One way of keeping track of an insured’s mileage would be to install a device, such as a GPS device, into the car.  Such tracking devices have already raised controversy among consumers.  In California, for example, consumers successfully lobbied to ban the use of GPS devices for the purpose of monitoring mileage.  Adam Cole, general counsel at the California Insurance Department, stated that the California Insurance Department was willing to ban the use of such devices until the concept gained wide acceptance among California residents. 

Despite growing controversy surrounding the issue of global warming, the discussions had at the Climate Risk Summit demonstrate that insurance carriers are still concerned with both monitoring risk associated with carbon dioxide emissions and offering environmentally friendly products and initiatives for consumers.