By Timothy Darragh, BESTWIRE
March 26, 2019
A coalition of consumer organizations is asking the California Department of Insurance to mandate that insurers disclose the fossil-fuel projects they are underwriting.
The petition also asks the department to require insurers to disclose their investments in fossil fuel-related entities.
The effort to push insurance companies to disclose their fossil-fuel projects comes as California insurers reported incurring more than $11.4 billion in wildfire losses (Best’s News Service, Jan. 29, 2019). PG&E Corp. declared bankruptcy as its equipment has been implicated in causing several of the deadly wildfires that raked the state last year, leaving the company with liabilities of $30 billion or more (Best’s News Service, Feb. 1, 2019).
“By insuring the fossil fuel projects responsible for the increased intensity of wildfires, mudslides and flooding, insurance companies fuel the very disasters they are insuring homeowners against,” said Carmen Balber, executive director of Consumer Watchdog, one of the petitioners. “It’s outrageous that survivors of wildfires and other disasters have to fight with their insurance companies for coverage while insurers are paying out billions to the fossil fuel companies responsible.”
A spokeswoman for the American Property Casualty Insurance Association declined to comment.
If Insurance Commissioner Ricardo Lara agrees with the regulatory change, California would be the first state in the nation to mandate disclosure of insurance companies’ fossil fuel project underwriting, the consumer groups said in a news release. A department spokesman did not respond immediately to a request for comment.
California’s Department of Insurance already requires disclosure of fossil fuel-related investments by insurance companies writing more than $100 million in premiums, but the consumer groups say that excludes half the insurance companies in the state, it said. The group wants the regulation expanded, it said.
The volume of claims from the Camp Fire alone last year overwhelmed Merced Property and Casualty Co., forcing regulators to seize control of the company (Best’s News Service, Dec. 3, 2018).
Insurers face not only heavy losses from wildfires tied to climate change, but they also risk seeing investments in fossil fuel entities decline as governments and institutions move their portfolios to renewable energy companies, it said. The value of fossil fuel entities has declined as coal has gone from generating nearly half of U.S. electricity to approximately 30%, it said.
Some insurers have already moved forward with plans to phase out fossil fuel-related business. Allianz Group last year ceased covering single coal-fired power plants and coal mines (Best’s News Service, May 7, 2018).
California is the nation’s largest insurance market, with more than 1,300 insurance companies collecting $310 billion in premiums annually and holding $5 trillion in assets under management, the petition states.
(By Timothy Darragh, associate editor, BestWeek: [email protected])