Category Archives: Direct lobbying

Political Mojo

16 September 2014
Author: T. Todd Elvins
copyright (c) 2014 T. Todd Elvins

The National Climate Assessment released by the White House on 06 May 2014 anticipates accelerated climate disruption in the future if global carbon emissions continue to surge unchecked.  Luckily, there is an unassuming champion poised to unleash their political mojo at a scale that could finally start to level off and decrease emissions.  That champion is the global insurance industry, whose solvency is jeopardized by extreme weather events.  State insurance regulators, insurance trade organizations, and insurers themselves are pooling their mojo to lobby for climate legislation that would preserve the industry’s global position as 2nd largest, with US$4.5 trillion in annual revenue and US$25 trillion in total global investments.

Insurers

Through a series of international meetings starting in 1992, insurers came to realize that extreme weather events could trigger more insurance claims than insurers have the capacity to pay, and in the long term global climate disruption could bankrupt the entire industry.  In 2008, insurance industry analysts rated climate change their number one strategic threat.

This threat stems partially from the insurers’ massive investments in publicly-traded stocks and other assets, some of which will decrease in value as extreme weather worsens.  Falling stock values will drag down the value of insurers, and vice versa.  Mindy Lubber, president of global sustainability non-profit Ceres comments, “If climate change undermines the financial viability of the insurance industry, it will have a devastating impact on the [global] economy as well.“

Deteriorating insurer financials will initiate a negative feedback loop by reducing customer confidence, decreasing insurance policy sales and further damaging insurer financials.  To make matters worse, some businesses that buy insurance are carbon-intensive and could be seen as responsible and liable for causing global climate disruption, thus increasing insurer payout exposure.

Global insurers are rallying to reduce their exposure and to include climate disruption in their risk assessments and investment criteria.  Many insurers have signed the Statement of Environmental Commitment by the Insurance Industry, which commits the insurer signatories to work together with governments to identify solutions for air pollution and global climate disruption.  Most economists and many governments agree that the fastest, cheapest, simplest, and most effective climate policy is a carbon tax on corporate polluters with the proceeds of the tax returned to the taxpayers as income tax reductions.  Deployed successfully in a dozen countries, such a revenue-neutral carbon tax could be developed by governments working together with corporations including insurers.

European insurers and reinsurers (the large companies that insure insurance companies) have redirected their focus from climate adaptation to climate mitigation by advocating legislation that reduces carbon emissions.  Following the lead of their European counterparts, a small cadre of U.S. insurers have quietly lobbied the U.S. Congress for climate legislation over the past few years.

Trade Organizations

Insurance trade organizations provide legal, financial, education, and advocacy services for their insurer members. Developing guidance for business continuity and advocating climate legislation now consume an increasing part of these services.

The chief insurance regulators of each U.S. state are called commissioners and the National Association of Insurance Commissioners is a trade organization that works to increase the resilience of the insurance industry.  NAIC president Sandy Praeger, writes, “Nearly anything that is insured … is vulnerable to weather-related events.”  If insurers suddenly received claims, not just on the seven trillion dollars worth of hurricane-prone U.S. East and Gulf Coast properties, but on a majority of policies, the industry would become insolvent.

The trade organization Reinsurance Association of America (RAA) strives to promote a globally competitive and financially robust reinsurance industry. In mid 2013, RAA President Frank Nutter testified before the U.S. Congress explaining that the insurance industry can only be effective as an enabler of change, “if the regulatory and legislative framework establishes the right incentives for emissions reduction and adaptation on a global scale.”  Simply put, insurers will be unable to scale up extreme weather loss coverages if governments fail to enact climate legislation and reign in future climate disruption.

Regulators

U.S. state insurance regulators’ mission is to impose standardized rules on the business of insurance, work to maintain the availability and affordability of insurance for customers, and guard against insurer bankruptcy.  Insurer Munich Re estimates that U.S. weather related losses increased nearly fourfold since 1980, with over a half trillion dollars of losses from extreme weather between 1980 to 2012.  The United Nations Environment Programme estimates that losses could hit a trillion dollars per year by 2040.  NAIC President Sandy Praeger comments, “State insurance regulators are aggressively moving forward to influence greater industry attention and action.”  To avoid a total failure of their mission, regulators have also started to advocate state and federal climate legislation, and are urging insurers to do likewise.

Insurer, trade organization, and regulatory studies have all arrived at the same conclusion.  Governments must enact strong climate legislation if the insurance industry is to remain intact.

Too Big To Fail

Maurice “Hank” Greenberg, the former Chairman and CEO of AIG, the world’s largest insurance company, said in late 2013, “Climate change is real, and you don’t risk the solvency of your company by saying, ‘I don’t believe it’.  A scenario more likely than failure is that the large insurers would stop offering coverage for weather or disaster related claims.  In an age of increasing disasters, this scenario is undesirable, and insurers can only narrow coverages for so long before climate disruption outpaces the insurers ability to downsize policies.  The stability of the industry is correlated to the stability of the climate.

Stakeholders
U.S. insurers have political clout. They spent $1.8 billion over the past twelve years lobbying the U.S. Congress, primarily on health insurance issues.  Urged by regulators, commissioners, executives, board members, shareholder resolutions, trade organizations, and customers, many insurers will be compelled to re-direct their political mojo to lobby for climate legislation in the U.S. Congress.  Triple the budget of the fossil fuel lobby, a big influx of insurance lobby spending would unarguably: increase the priority of climate legislation such as a revenue-neutral carbon tax, reduce carbon emissions, and stabilize the insurance industry.

Advertisements

Citizens Lobby Congress

Marshall
Founder Marshall Saunders

Citizens Climate Lobby (CCL) is laser focused on, and extremely effective in lobbying members of congress, one-on-one, applying pressure for carbon fee and dividend legislation — a revenue-neutral carbon tax.  Most all economists agree that a carbon tax is the cheapest, simplest, and by far most effective policy for reducing carbon emissions.  The new report from Regional Economic Models, Inc (REMI) further support CCL’s position.

Let’s apply the CarbonTax Workshop (CTW) evaluation metric to Citizens Climate Lobby (CCL).

  1. CCL does an excellent job defining, (1) the problem, (2) CCL’s proposed solution Carbon Fee and Dividend, and (3) why CCL’s climate solution is the most effective, simple, realistic, and scalable.  Score: 10.
  2. CCL’s message is focused, direct, and convincing.  The organization membership is doubling in size every year. Score: 10.
  3. CCL’s first priority is direct lobbying and secondarily works to expand membership.  Expanding membership is probably tough since many people are not comfortable writing strongly worded letters to the editor, and speaking to members of Congress and their staffers.  CCL is mentioned frequently in climate-related news, and has started popping up in google ads.  Perhaps there is more that could be done in a membership campaign.  CCL’s membership could potentially benefit from new mobilization approaches developed by CTW.  Score: 9.

Overall CTW score is 29.  CCL is actively seeking new members for direct and indirect lobbying.

Below is background lifted from the CCL website.

———————

Citizens’ Climate Lobby (CCL) is a 7-year old, nonprofit, grassroots volunteer organization focused exclusively on passing a revenue-neutral carbon fee and dividend (CFD) to address climate change. CCL provides its members with tool kits for direct lobbying of local and national elected representatives and their staffs; conducts monthly actions and conference calls with experts to expand members’ personal political power; trains them in placement of public comments in print media and in building relationships with editorial boards, and organizes at a grass-roots level to build consensus. CCL empowers individuals to find their voice in the climate debate.

Last year, CCL volunteers conducted 710 meetings with federal legislators. The June, 2014 annual meeting in Washington drew over 600 volunteers who met with 508 Congressional offices over a 3-day period, respectfully listening to their concerns and discussing new economic modeling showing a stimulus effect of a national CFD when 100% of the revenue is returned to households. In 2013, volunteers published 1270 Letters to the Editor and numerous op-eds, reaching an estimated 20 million people, with double that rate this year. CCL met with 46 editorial boards in 2013, resulting in 41 favorable editorials. CCL also engages economists, military leaders and both progressive and conservative think tanks, as well as faith community leaders.

CCL is growing rapidly. Support doubled last year to over 6,000 members in 188 chapters (+ 99 more in formation) covering 329 Congressional districts in 48 states and Canada (June, 2014). CCL aims to have members in all 435 Congressional districts by the end of 2014. New groups are starting in 11 other countries.