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Transcript
IV AIDA Europe
Climate Change Working Party
A U.S. Perspective
Peter Kochenburger
Associate Clinical Prof. of Law
Exec. Director, Insurance Law Center
Public Opinion in the U.S.
March 2012
“Global warming should be a (medium, high or
very high) priority for the President and
Congress.”
Overall: 72%
Democrats:
84%
Independents: 68%
Republicans: 52%
(Yale Project on Climate Change Communication)
The Candidates
President Obama
Romney
And yes, my plan will continue
to reduce the carbon pollution
that is heating our planet –
because climate change is not
a hoax. More droughts and
floods and wildfires are not a
joke. They’re a threat to our
children’s future. And in this
election, you can do
something about it.
Aug30
Dem. Convention Sept 6
Governor
President Obama
promised to begin to
slow the rise of the
oceans and heal the
planet. MY
promise...is to help
you and your family.
Rep. Convention
National Party Platforms: 2012
Democratic: “We will lead to defeat the
epochal, man-made threat to the planet:
climate change . . . Never again will we sit
on the sidelines, or stand in the way of
collective action to tackle this global
challenge . . . “
Republican: No affirmative statement –
removed climate change section that was in
2008 party platform
Insurance & Climate Change
Litigation
AES Corp. v. Steadfast Ins. Co.
725 S.E.2d 532 (Va. 2012)
The Virginia Supreme Court, in applying its
strict “8-corners” test for determining whether
there is a duty to defend, ruled that the Village
of Kivalina’s lawsuit against AES was not an
“Occurrence” under the Steadfast CGL policy.
As insurance policy interpretation is a matter of
state law, there is no further appeal, though
other states are not bound by this decision
Insurance & Climate Change
Litigation
The Aftermath of AES v. Steadfast is . . .
Lots of attention, but not much action.
Major Issues:
• Applicability of Absolute Pollution
Exclusion for Climate Change Claims
• Climate Change exclusions and state
regulatory review
Insurance & Climate Change
Litigation
• The U.S. Supreme Court stated the Clean Air
Act preempted federal common law claims,
but did not decide whether state law claims
were also preempted (e.g. public nuisance)
Am. Electric v. Connecticut, 131 S.Ct. 2527 (U.S. 2011)
• The Indiana Supreme Court ruled that
environmental mitigation efforts to avoid
future harm is not an “Occurrence.”
Cinergy Corp. v. Associated Electric, 865 N.E.2d 571;
Cinergy v. St. Paul, 915 N.E.2d 524 (Ind. Ct. App. 2009)
Insurance & Climate Change
Professional Liability Exposure
 Professional Services and Errors & Omissions
 e.g.
Engineers, Architects
 Directors & Officers
“Yet despite widespread recognition of the effects
climate change will likely have on extreme events,
few insurers were able to articulate a coherent plan
to manage the risks and opportunities associated
with climate change.”
Ceres: Climate Risk Disclosures by Insurers, Sept. 2011
Insurers & Climate Change
Public Acknowledgment
 State Farm, CNA: no discussion found
 Allstate:
http://www.allstate.com/socialresponsibility/environment/climate-change.aspx
 Travelers:
https://www.travelers.com/about-us/travelersinstitute/thought-leadership/climate-and-environment.aspx
 The Hartford:
http://www.thehartford.com/sites/thehartford/files/1287779085695.pdf (2010
Sustainability Report)
Compare to
 Swiss Re:
http://www.swissre.com/rethinking/climate/ (650 hits)
 Hannover re: http://www.hannover-re.com/csr/eco/protection/index.html
 Lloyd’s:
http://www.lloyds.com/lloyds/corporateresponsibility/environment/climatewise
Regulatory Responses
• In March 2009 the National Association of
Insurance Commissioners (NAIC) approved a
mandatory climate risk disclosure survey
• In March 2010 the NAIC made the survey
voluntary in light of industry opposition
• Three states continue to mandate reporting –
California, New York and Washington. The
company filings are public:
http://www.insurance.ca.gov/0250-insurers/0300-insurers/0100applications/financial-filing-notices-forms/annualnotices/ClimateSurvey.cfm
Hydraulic Fracturing: Overview
• Frequent practice in U.S. (over one million sites
drilled). 5X increase in shale gas production
between 2006 and 2010 (Marcellus Shale – PA)
• No direct federal prohibition, though
environmental laws applicable (e.g. Safe Drinking
Water Act)
• Individual State Assessments:
• New York, New Jersey – prohibition
• Pennsylvania, North Dakota – “drill baby drill”
Fracking
Pressures: Energy Sufficiency, Energy Cost, Profit &
Employment
Intense industry pressure in New York to open upstate
regions to fracking
• North Dakota – 575,000 barrels a day (2X two years
ago), lowest unemployment in U.S., population decline
reversed
•
Great Uncertainty:
•
•
•
•
Environmental effects uncertain and debate “vigorous”
Inconsistent Regulatory Approaches: Federal, State, local
Private Litigation – state common law, federal & state laws
Coverage positions untested
Fracking: Insurance Coverage
• Commercial General Liability – Pollution
Exclusion may exclude coverage
• Specialized environmental liability
endorsements – Questions regarding
scope, retentions, limits, and judicial
interpretations
• Homeowners First Party Property
Coverage: pollution exclusion applies?
Fracking
Nationwide Insurance:
“From an underwriting standpoint,
we do not have a comfort level with
the unique risks associated with the
fracking process to provide coverage
at a reasonable price.”
July 13, 2012 Press Statement