Major insurance giant will not insure coal projexts. Will U.S. companies finally get on board?
On Monday the insurance company CHUBB announced it would no longer underwrite coal-based power plants and companies that get more than 30% of its revenues from coal power. CHUBB’s move follows similar moves from European insurance companies including Zurich, which announced last week that it will not underwrite or invest in companies profiting from oil.
CHUBB, based in Switzerland, does much of its business in the U.S. and will hopefully pave the way for other U.S. insurers to follow suit. Overall U.S. insurance companies are lagging behind their European counterparts when it comes to addressing the risks posed by fossil fuels. 22 major European insurers have divested from coal and tar sands companies and 11 have stopped or limited underwriting for the coal and tar sands industries. No major U.S. insurance company has so far pledged to divest its holdings in fossil fuel companies or restrict underwriting for fossil fuel projects.
California could be leading the U.S. on this effort but the Insurance Commissioner Ricardo Lara doesn’t appear to be interested. On Earth Day, Lara chose “collaboration" with the insurance industry over urgent climate action. Commissioner Lara rejected a petition from 60 environmental, consumer and social justice groups that sought emergency rules to make insurers disclose the fossil fuel projects they insure.
The Commissioner's refusal to act allows insurers to keep their complicity in global warming secret and puts the brakes on the forward momentum on climate built by the previous Department of Insurance.
Read the petition submitted to Commissioner Lara in March by the 60 organizations below: https://consumerwatchdog.org/sites/default/files/2019-03/FossilFuelPetition.pdf
Climate change-exacerbated catastrophes are costing insurance companies billions, making extreme weather events worse and exposing the industry to financial and physical risks. The November 2018 wildfires alone, including the Camp and Woolsey fires, have caused more than $11.4 billion in insured losses, according to the California Department of Insurance.
The Insurance Commissioner in California has broad authority to require insurance companies to disclose any information necessary to ensure consumers’ access to insurance and a responsibility to ensure the financial stability of the companies it oversees.
The California Department of Insurance’s Climate Risk Carbon Initiative currently requires disclosure of fossil fuel-related investments by insurance companies writing more than $100 million in premiums. The disclosures sought by the petition would have expanded those disclosures to cover all underwriting of and investment in fossil fuel projects by the 1,300 insurance companies that do business in California, the largest insurance market in the nation.
Some insurers have begun to argue that the extreme weather events caused by climate change will make property insurance increasingly unavailable to all but the wealthiest consumers.
To preserve consumers’ access to insurance, companies should be cutting ties with the fossil fuel industry, not raising prices and refusing to sell coverage.
California deserves to have an insurance commissioner who will hold the industry accountable.