By Don Jergler, INSURANCE JOURNAL
May 16, 2019
Michael Peterson has had about five months to come in and tackle what promises to be unique job.
Peterson is California’s deputy commissioner for climate and sustainability. After California Insurance Commissioner Ricardo Lara named Peterson to the newly created job in January, the creation of post was hailed as “the nation’s first executive-level position focused on engaging the insurance industry in the fight against climate change.”
Peterson previously served as a legislative consultant for then-state Senator Lara, focusing on climate change, natural resources and energy policy. He was previously a consultant for the California State Senate Committee on Natural Resources and Water.
Peterson is a scientist by training, having studied natural resources, streams, mountains, forests, and animals, and the effect of climate change in that space.
After only five months in the post, he’s not ready to recommend sweeping changes or tougher regulations to bring insurers in California further into the battle against climate change, but the conversations with the industry have been ongoing – and going well by his account.
“I think insurers have been ready to talk about these issues,” Peterson said. “I’d say not all of the ideas are fully out there. We’re still looking to be collaborative well into the future, but I think the response has been very good.”
Peterson’s boss Lara stepped into some big shoes – from a battling climate change perspective – when he replaced outgoing Insurance Commissioner Dave Jones, who spent several years in office pushing insurers to end their investing in fossil fuels.
Jones in 2016 called on insurance companies doing business in California to voluntarily divest from thermal coal investments and required insurers with more than $100 million in annual premium to disclose publicly their investments in fossil fuels.
He also established the Climate Risk Carbon Initiative, which includes information on the amount of oil, gas, coal and utilities investments held by insurance companies, and whether the insurers have divested from thermal coal, the amount of thermal coal divested and any future commitments to divest.
Jones isn’t done. ClimateWorks Foundation in March named him as a distinguished fellow. Jones will provide input to the Climate Risk Analysis, Disclosure, and Supervision initiative, which is part of the Sustainable Finance portfolio at ClimateWorks.
Even before he was elected commissioner, Lara said on the campaign trail that if he were to win, he plan would be to take the climate change issue to heart.
“Something I see as critical is how do we develop climate insurance,” he told Insurance Journal in a March 2018 interview.
Lara co-sponsored Senate Bill 290, the California Disaster Insurance Act, not long after he took office.
Proponents say the bill could lead California to consider buying insurance in the private market to cover rapidly increasing costs of fighting wildfires due to climate change. The bill passed the Senate Governmental Organization committee in March, and is making its way through Legislature.
To celebrate Earth Day in April, Lara launched Climate Smart 2020, an effort to reduce his department’s carbon footprint.
Expect more from Lara’s office on climate change. “The conversations are early on,” Peterson said.
U.S. insurers are often viewed by activists as being slow or not as willing to take steps to battle climate change as their European counterparts.
That’s one thing Peterson hopes to change.
“I’d say that, in general, there’s a huge opportunity in the insurance sector to better address the causes and consequences of climate change,” he said. “In that space there are some really exciting examples that have come from European reinsurers who, for instance, worked with local officials in Mexico to insure a coral reef, or invested in programs that link up with the UN in terms of the protective power that mangroves have for storm surge events. There’s some big examples that have come from companies who are located in Europe.”
But not everything Lara’s team has done has pleased climate change activists.
Lara in April drew activists’ ire when he rejected a petition urging him to place new regulations on insurers to disclose what projects in the fossil fuel industry they underwrite. More than 60 environmental, consumer and social justice organizations had delivered the petition to Lara a month earlier hoping he’d beef up oversight of what they see as insurers enabling the fossil fuel industry.
Lara, in a written response, outlined his reasoning for the rejection, and said he is pursuing a more comprehensive climate strategy, which will include incentivizing climate smart investments.
“Commissioner Lara positions himself as a climate champion yet rejected this simple step towards transparency,” Carmen Balber, executive director of Consumer Watchdog, said in a statement following the rejection. “Every new scientific study finds the climate threat is more urgent than the last. In denying this petition, Commissioner Lara denies that urgency in favor of more talk and ‘collaboration’ with the insurance industry. By refusing to acknowledge the insurance industry’s role in causing global warming, he’s abdicating California’s leadership role in combating climate change.”
Peterson, when pressed about the rejection, echoed Lara’s argument. “What we’re looking for is a comprehensive set of policies,” he said. “I think that having a more collaborative approach is appropriate here.”
Peterson applauded Jones for what he did on climate change, but said what Lara’s office plans to do is to take the “next step.”
“The insurance commissioner did some groundbreaking things with his fossil fuel data base,” Peterson said.
But the next step is to get more cooperation, and interest, from U.S. insurers to help in the battle against climate change, he added.
“What’s the broad pathway forward that advances climate policy?” he said. “We will push for a comprehensive approach.”