The NAIC exists primarily to stave off federal regulation while setting the lowest possible bar for state regulators, who are often captured by industry interests.
FOR IMMEDIATE RELEASE
CONTACT: Kenny Stancil, stancil@therevolvingdoorproject.org
Today marks the publication of Demystifying the National Association of Insurance Commissioners, a new report co-authored by Jordan Haedtler, a Climate Financial Policy Consultant to the Sunrise Project and Climate Cabinet, and Revolving Door Project Senior Researcher Kenny Stancil.
The report looks at the underappreciated role the National Association of Insurance Commissioners plays in thwarting pragmatic economic policy that incorporates climate reality. Haedtler and Stancil argue that the NAIC, which plays an influential role in setting state insurance policy, exists primarily to stave off federal regulation while setting the lowest possible bar for state regulators, who are often captured by industry interests. In addition to explaining how the NAIC serves as a barrier to more effective management of the climate-driven insurance crisis, the report highlights why it’s harmful to delegate public policy-making power to an unaccountable private organization that exists outside the democratic process.
In addition to the report, Haedtler and Stancil wrote “Democrats Must Start Distinguishing Themselves on Insurance Policy,” a companion piece for The American Prospect. That article, also published today, urges Democrats to depart from the NAIC doctrine, embrace the political opportunity that the insurance crisis presents, and act like “personnel is policy” on insurance by filling a key vacancy on the Financial Stability Oversight Council (FSOC) and other crucial positions at the state level.
Jordan Haedtler, a Climate Financial Policy Consultant to the Sunrise Project and Climate Cabinet, said: “Climate change is causing insurance markets to melt down, spreading risk to the financial system, and driving higher housing prices and inflation. Insurers have had decades to anticipate the threats that climate pollution poses for their industry, but they have blocked action toward better understanding and addressing climate risk. The NAIC has too often been a part of that obstruction, as seen recently when it undermined an important federal data collection.”
“From both a policy and political standpoint, Democrats urgently need to get a handle on insurance policy, and they must not let the NAIC get in the way,” said Haedtler. “President Biden must take action to understand and address insurance market chaos, including by filling a vacancy on the FSOC, and encouraging governors and other state policymakers to implement regulatory recommendations made by his administration last year.”
Revolving Door Project Senior Researcher Kenny Stancil said: “The climate-driven insurance crisis is exacerbating the housing affordability crisis and putting the entire financial system at risk. Insurance companies have spent decades ignoring the threats posed by unmitigated greenhouse gas pollution; even today, their response to mounting and projected damages of climate change-intensified extreme weather has been to abandon vulnerable communities rather than divest from culpable fossil fuel corporations.”
“What’s worse, the vast majority of state insurance regulators who could compel insurers to better assess and manage climate risk are asleep at the wheel,” Stancil continued. “State Democratic lawmakers and regulators would be wise to set themselves apart on insurance policy by swiftly incorporating changes proposed last year by the U.S. Treasury Department’s Federal Insurance Office, rather than deferring to the slow and regressive approach favored by the obscure and unaccountable NAIC.”
The above photo is in the public domain.