Group urges the insurance commissioner to hold companies accountable
By Kenneth Araullo, INSURANCE BUSINESS
Consumer Watchdog has called for Insurance Commissioner Ricardo Lara to enforce transparency from insurance companies regarding their insurance of fossil fuel projects, aligning with the broader climate summit hosted by Lara in Los Angeles.
The advocacy group’s call to action revisits a request previously made by over 60 environmental, consumer, and social justice organizations in 2019, which sought regulations for disclosing fossil fuel underwriting and investments — a petition that Commissioner Lara declined.
According to a recent report by Insure Our Future, 12 California-based insurance companies, despite announcing restrictions on coverage within the state, generated an estimated $3.6 billion from insuring fossil fuel infrastructure.
This financial involvement underscores a significant gap between US insurers and their European counterparts in terms of transparency and commitment to mitigating climate change impacts.
Notably, Zurich, recognized as the world’s sixth-largest insurer of fossil fuels, recently pledged to cease underwritingnew oil, gas extraction, and metallurgical coal projects, a move that places all major European insurers in opposition to insuring new oil and gas extraction projects.
Lara no “climate champion”
Carmen Balber, the executive director of Consumer Watchdog, criticized the lack of accountability within the insurance industry and Lara’s current stance as a “climate champion.”
“The insurance industry must be held accountable for pushing all of the costs of climate change on to consumers while continuing to reap billions in profits from investments in and underwriting the fossil fuel activities destroying the planet,” Balber said.
The organization also suggested that insurance firms implicated in climate change should bear additional responsibilities, such as supporting disaster mitigation efforts. This concept mirrors initiatives in Connecticut, where lawmakers and public interest groups have proposed imposing fees on insurers backing fossil fuel projects.
The climate summit’s timing comes as California residents face growing challenges in securing affordable home insurance, exacerbated by insurers’ sales pauses and non-renewals.
Despite these challenges, Consumer Watchdog has criticized Commissioner Lara’s proposed solutions, which they argue would benefit the insurance industry without ensuring expanded coverage for homeowners in wildfire-prone areas.
Documents revealed by Consumer Watchdog highlight two significant loopholes in Commissioner Lara’s proposal, including the allowance for insurers to fulfill their coverage expansion commitment with minimal policies and the possibility for insurers to bypass the commitment entirely if they claim incapability.