Climategate Controversy Roils the Insurance Industry

Environmentalist groups are fond of quoting insurance companies who argue that climate change is a big problem. This supposedly shows that profiteers, who are despised in other contexts, agree with the activists about the real and present danger of man-made global warming. In fact, the National Association of Insurance Commissioners, the lobby group for the folks that regulate insurance companies, has begun requiring insurance companies to answer a Climate Risk Disclosure Survey as a way alert investors and insureds about each company's exposure to the risks of climate change.

Now some insurance companies are pushing back. In a recent letter, the National Association of Mutual Insurance Companies, specifically citing the Climategate affair, argues against the disclosure requirements on the grounds that the uncertainties surrounding climate science make it hard to properly assess risks. As the letter explains:

Climate Risk Disclosure Survey—Proposal For Implementation january 2010

Relevance of Recent Revelations Regarding Climate Science

In the months leading up to its adoption by the NAIC, NAMIC presented several arguments opposing the survey. One of these was that there is simply too much uncertainty about the nature of climate change—e.g., the rate at which it is occurring, the extent to which it is caused by human activity, its relationship to natural catastrophes such as hurricanes and droughts, and the economic trade-offs that would be entailed by various actions that might be taken to prevent further warming—for regulators to assume that all insurers have a material exposure to "climate risk" sufficient to justify mandatory "disclosure" of this purported risk to regulators and the public. Survey proponents replied that because uncertainty is inherent in any type of risk assessment, uncertainty about climate change shouldn't prevent insurers form assessing the risks associated with climate change, nor should it prevent regulators from inquiring about the results of those assessments. At the same time, proponents suggested that there was little room for doubt that "global warming is occurring," as a 2008 Task Force white paper unequivocally declared. The white paper disposed of the debate over the extent and consequences of anthropogenic global warming in a single sentence: "[The Task force] believe[s] that there is ample evidence in support of this assumption in a variety of other reports and studies, so we have decided not to focus on the scientific aspects of global warming."

That decision was certainly questionable in 2008. Today, it is untenable in our view. The unauthorized release in November 2009 of thousands of e-mails containing correspondence among scientists affiliated with the University of East Anglia's Climate Research Unit (CRU) makes clear that insurers, regulators, and anyone else with a serious interest in climate change cannot afford the luxury of simply assuming that the "reports and studies" to which the Task Force white paper alludes present an accurate and unbiased picture of what is known about climate change.

The CRU e-mails show that a close-knit group of the world's most influential climate scientists actively colluded to subvert the peer-review process (and thereby prevent the publication of research by scientists who disagreed with the group's conclusions about global warming); manufactured pre-determined conclusions through the use of contrived analytic techniques; and discussed destroying data to avoid government freedom-of-information requests.

Viewed collectively, the CRU e-mails reveal a scientific community in which a group of scientists promoting what has become, through their efforts, the dominant climate-change paradigm are at war with other scientists derisively labeled as "skeptics," "deniers," and "contrarians." The insularity and non-collegiality of these climate scientists had previously been noted in a 2006 report to Congress prepared by a committee of statisticians led by Dr. Eugene Wegman of George Mason University. The Wegman Report examined the body of research behind the widely-publicized "hockey stick" graph, which purported to show a dramatic and unprecedented increase in average global temperature during the twentieth century. After thoroughly discrediting the hockey stick graph, the report observed that "authors in the area of paleoclimate studies are closely connected and thus 'independent studies' may not be as independent as they might appear on the surface." The report further noted "the isolation of the paleoclimate community," concluding that "even though they rely heavily on statistical methods, they do not seem to be interacting with the statistical community." When members of paleoclimate community were asked to explain and defend their work, "the sharing of research materials, data and results was haphazardly and grudgingly done."

In short, because serious questions have been raised about the integrity of contemporary climate science, NAMIC believes it would be exceedingly risky for any insurance company to make important business decisions based on an uncritical acceptance of the dominant scientific paradigm on climate change. Put differently, we believe there is considerable risk involved in an approach to assessing "climate risk" that assumes the validity of any particular theory or set of beliefs about anthropogenic global warming.

Companies that share our perspective should be encouraged to do so in their responses to the Climate Risk Disclosure Survey. We fear, however, that the wording of the survey questions, together with the public pronouncements of some regulators, will inhibit the expression of what might be viewed as unwelcome "contrarian" responses. This fear was reinforced by the overall tone and substance of the Task Force-sponsored Climate Risk Summit that took place in San Francisco on December 9, 2009. Rather than thoughtfully assess the implications that the CRU e-mail scandal holds for insurers and the Climate Risk Disclosure Survey process, all but one speaker ignored the matter entirely. That speaker, in facilely dismissing the e-mail scandal as a plot hatched by malevolent "contrarians," personified the doctrinaire partisanship and intolerance toward dissent that is so clearly displayed in the CRU e-mails.

If the CRU Climategateers and other climate change researchers had been as transparent about their science as the insurance commissioners are demanding that insurance companies be, this controversy would likely never have arisen.