Insurance Industry Needs To Dump Fossil Fuels, Says Watchdog Group
By Ryan Smith, INSURANCE BUSINESS
October 10, 2018
Despite a recent United Nations finding that urgent action is needed to combat climate change, the top 10 US insurance companies are holding more than $50.9 billion in fossil fuel investments, according to a report by Consumer Watchdog.
The UN Intergovernmental Panel on Climate Change recently stated that drastic actions must be taken to cut carbon emissions over the next decade in order to avoid global warming spiraling past the point of no return. However, while nine of the 10 largest American insurance companies have considered the impact of climate change on their investments, only two – AIG and Farmers – say that they have altered their investment strategy, according to Consumer Watchdog. America’s largest insurance company, State Farm, did not consider the risk of climate change at all, and holds $22.4 billion in fossil fuel investments.
“Insurance companies’ response to climate change should be to side with the victims, not support the perpetrators,” said Jamie Court, president of Consumer Watchdog. “What if hospitals sold crack, doctors offered cigarettes in their waiting rooms, and firefighters gave out flamethrowers? Insurance companies are paying unprecedented claims because of global warming, and they need to be part of the solution if the UN’s call to action is to be realized.”
The eight top US insurance companies that do not consider climate change in their investments are State Farm, Allstate, Liberty Mutual, Berkshire Hathaway/Geico, Travelers, Nationwide, Progressive and USAA. Only one US insurance company, Lemonade, has pledged not to support fossil fuels, according to Consumer Watchdog.
European insurers, on the other hand, are ditching fossil fuels. Seventeen insurers with assets of at least $10 billion have divested from coal, and six of the world’s largest insurers – Allianz, AXA, Munich Re, SCOR, Swiss Re and Zurich – have limited or ceased their insuring of coal projects. AXA and Swiss Re have also limited their underwriting of tar sands projects, Consumer Watchdog said.
“It’s worth looking at the hypocrisy of California’s insurance industry one year after the Tubbs fire, one of the worst fires in history,” Court said. “Last year’s wildfires produced $12.7 billion insured losses for the industry alone due to unprecedented fires precipitated by global warming, yet the industry invests in and insures coal and other fossil-fuel projects that are exacerbating climate change.”