Climate and Insurance.org | takefive with Commissioner Sean Dilweg

Sean Dilweg is Commissioner of Insurance for the state of Wisconsin. Gov. Jim Doyle appointed him to that position on Jan. 1, 2007. The office has a staff of 135 and is responsible for examining industry financial practices and market conduct, licensing agents, reviewing policy forms for compliance with state legislation, investigating consumer complaints and providing consumer information. In addition to its regulatory duties, the agency administers the State Life Insurance Fund, Local Government Property Insurance Fund and the Injured Patients and Families Compensation Fund.

Prior to this appointment, Commissioner Dilweg was the Executive Assistant to the Secretary of the Wisconsin Department of Administration (DOA) from 2003 to 2006. In addition to managing key agency activities, including external communications, tribal negotiations and state finances, he advised the Secretary of the Department of Administration and Governor Jim Doyle on legislative and policy matters. He played a lead role for the administration in the creation of the HIRSP Authority under 2005 Act 74.

Commissioner Dilweg served as director of policy analysis at Essie Consulting Group, a major Madison consulting and lobbying firm, from September 2000 to January 2003. He was a lead policy advisor for members of the Joint Committee on Finance during three biennial state budgets and as Committee Clerk for the Senate Committee on Environment and Energy from 1995 to 2000. He also served in several other legislative staff positions beginning in 1991.

Commissioner Dilweg holds a Masters in Public Administration from the La Follette Institute of Public Affairs at the University of Wisconsin - Madison (1998) and a B.A. in English from Lawrence University in Appleton (1989).

Takefive:
One of the Task Force’s 2008 charges is to finish drafting the white paper it began last year on the implications of climate change on various lines of insurance. What is the status of the report and will it meet its goal of being completing it by the NAIC summer national meeting?

Commissioner Dilweg:
I recently formed a work group comprised of Climate Change and Global Warming Task Force members, interested regulators, advocates and industry representatives to edit the initial draft of the white paper. I distributed a revised draft, based on the work of this group, at the March 30th NAIC Climate Change and Global Warming Task Force meeting. Regulators and interested parties will have 30 days to provide comments on this draft.

The Task Force will vote on the white paper at the NAIC summer national meeting in June. The NAIC Executive Committee, of which I am a member, may take action on the white paper in June as well.

Takefive:
At an interim meeting in late February, the Task Force released a draft proposal describing how insurers in the future would be required to participate in mandatory climate risk disclosure interrogatories as part of their annual statement filings. The proposal was described as a “starting point for the discussion regarding new interrogatories.” Can you elaborate on what the Task Force meant by this statement?

Commissioner Dilweg:
My goal, and that of the Task Force, is to advance a disclosure proposal that will result in greater climate change-related reporting by insurers. I am currently circulating a draft proposal for comment as a first step in reaching this goal. In the coming months, the work group I formed, which is comprised of consumers, advocates, industry representatives and regulators, will analyze and revise the initial draft.

There is no question whether the Task Force will move forward with disclosure requirements. Rather, the issue is determining the most effective and efficient way to require reporting. The draft represents an option for greater disclosure; recognizing there are many perspectives on this issue that need to be considered.

Takefive:
The draft proposal talks of a common framework for the disclosure interrogatories consisting of four components: emissions disclosure, strategic analysis of climate risk and emissions management, regulatory risks and physical risks. Can you briefly describe the type of information that the Task Force would expect insurers to submit under each component?

Commissioner Dilweg:
The four areas in the draft disclosure proposal follow the Global Framework for Climate Risk Disclosure. The Framework consists of four elements of disclosure:

Rather than reiterate the type of data expected, it may be more useful for your website visitors to look at two documents. The first document is the Global Framework for Climate Risk Disclosure. The second document, entitled “Using the Global Framework for Climate Risk Disclosure,” gives details and examples of how the framework can be used. Both of these documents are produced by the United Nations Environment Programme Finance Initiative.

Takefive:
The proposal also calls for the interrogatories to be mandatory and to be phased in over four years, beginning in 2008 for insurers with premium over $100 million. Why is the Task Force proposing mandatory instead of voluntary disclosures, and has the Task Force considered the financial hardship that a mandatory disclosure could pose for smaller insurers?

Commissioner Dilweg:
Mandatory disclosure was proposed in the interests of uniformity, efficiency, and ease of compliance for insurers, especially multi-state insurers. The Task Force is mindful of the regulatory burden of disclosure, but also the extreme burden that could occur if multiple disclosure formats are imposed.

It is expected that the smaller insurers will benefit as the larger companies provide models of disclosure. It will be several years before smaller insurers are asked to disclose. Over that period the white paper anticipates continued refinement.

Again, the goal is to forestall “through proactive, thoughtful and coordinated action of the NAIC” “the potential regulatory burden that may be placed on insurers by multiple disclosure frameworks in the future.”

As the dialogue continues, the Task Force welcomes input from all parties.

Takefive:
Finally, does the Task Force intend to do anything differently (beyond the normal NAIC meeting process) to make insurers aware of the draft proposal? Also, is it still realistic to believe the proposal could be finalized this year as outlined in the Task Force’s second charge?

Commissioner Dilweg:
The draft disclosure proposal was distributed to the NAIC list of interested parties which includes regulators, industry representatives and advocates. Comments were due back on April 15.

The working group will further review and edit the disclosure draft and report its work to the full Task Force in June.

I anticipate adoption of a disclosure plan by Summer 2009. This date recognizes involvement of the Blanks Working Group.