Oklahoma’s attorney general on June 19 sent a letter to California’s insurance commissioner threatening legal action if that state continues with its policy of requiring insurance companies to publicly disclose investments in fossil fuels.
Oklahoma Insurance Commissioner John Doak followed up with his own letter to California Insurance Commissioner David Jones urging him to back off his Climate Risk Carbon Initiative, which calls for insurance company disclosure of investments in fossil fuel producing companies and aims to discourage them from such investments.
Oklahoma’s Attorney General Mike Hunter maintains that California’s policies, which require insurance companies to annually disclose their carbon-based investments, including investments in oil, gas and coal, will harm the energy industry. The disclosure requirement is targeted to companies selling in the California market that have at least $100 million in premiums nationally.
Jones also has asked all insurance companies doing business in California to voluntarily divest from investments in thermal coal in an effort to reduce carbon emissions and battle climate change.
Hunter urged Jones to stop requiring insurance companies to publicly disclose investments in fossil fuels and to stop asking insurers to pledge divestiture from the coal industry. His letter was signed by 11 other state attorneys general and one governor.
Doak told Jones in his letter dated June 20, that he and several other state insurance commissioners have “grave concerns” over the California commissioner’s fossil fuel policy and called the Climate Risk Carbon Initiative an “affront to sound insurance regulation.”
Jones has taken on climate change as one of his primary causes. He has said that insurers could have stranded assets on their books if investments in coal and other fossil fuels tank as green energy continues to become more affordable and regulations make fossil fuel-based investments an even worse bet.
But according to Doak, not only does California’s initiative “undermine the authority of each insurer’s domestic regulator, such a request substitutes traditional insurance solvency regulation with a narrow political agenda that places politics above sound insurance regulatory policies.”
Doak also said the initiative suffers from jurisdictional, legal and economic flaws, and that Jones’ belief that thermal coal investments run the risk of becoming stranded assets is at best “mere speculation.”
North Dakota Insurance Commissioner Jon Godfread also weighed in on the issue, stating in a press release that Jones’ “attempt to dissuade insurance companies from investing in the coal industry is a deeply misguided overreach.”
Godfread added that the job of “insurance commissioners is to protect consumers and serve the greater public interest through the effective and unbiased regulation of the insurance marketplace. We are not meant to make politically-motivated decisions that alienate insurance companies and undermine our authority to credibly regulate this industry.”
In his letter to Jones, Hunter wrote that the required disclosures “are largely immaterial to a well-functioning insurance market.”
Hunter said in a statement released by his office that Jones’ “misguided policy is negligent, politically driven, unrelated to insurance regulation and is risking a certain lawsuit.”
He also wrote that if Jones continues “to call for divestment and require discriminatory disclosures of fossil fuel investments, we will be forced to consider the legal avenues of relief available to protect our insurance carriers, energy producers, and consumers.”
Jones seems to be undeterred by the criticism.
“Climate change poses a potential financial risk to insurance company investments in coal, oil, gas, and utilities that rely on carbon to generate electricity,” he said in a statement responding to Hunter’s letter.
Jones didn’t specifically respond to Doak’s letter. But in his statement following receipt of the letter from the Oklahoma AG, Jones said: “For those climate denying politicians of red states who threaten to sue me, I will happily defend my obligation as California’s Insurance Commissioner to make sure insurers are addressing climate change related risks and to protect California consumers.”
Hunter’s letter is signed by the attorneys general of Alabama, Arkansas, Indiana, Louisiana, Missouri, Montana, North Dakota, Texas, Utah, West Virginia and Wyoming, and the governor of Kentucky. Doak’s letter is signed by insurance commissioners in Alabama, Indiana, Kentucky, Montana and North Dakota.