The CEOs of 30 global insurers have received a letter from a powerful group of NGOs urging them to end all support for new oil and gas projects.
The NGOs issued the letter to supporting the Unfriend Coal / Insure Our Future campaign say unless insurers withdraw support for any new projects it will be impossible for the world to meet international climate targets.
They also released research revealing that four of the 15 biggest oil and gas insurers are companies that have publicly backed the Paris Agreement target of limiting global warming to 1.5°C, while seven have already limited support for fossil fuels by restricting insurance for coal.
“Insurers have a responsibility to support international climate targets and align their businesses with the Paris Agreement,” said the letter, signed by 18 international NGOs including 350.org, Greenpeace, and Oil Change International. “As governments plan the recovery from the COVID-19 crisis insurers need to champion the transition to a sustainable, fair and resilient future as underwriters, investors and corporate citizens.”
The letter was sent to 30 insurance CEOs, including 13 in Europe (Allianz, Aviva, AXA, Generali, Hannover Re, HDI Global, Legal & General, Lloyd’s, Mapfre, Munich Re, SCOR, Swiss Re and Zurich), 10 in the US (AIG, AXIS Capital, Berkshire Hathaway, Chubb, The Hartford, Liberty Mutual, MetLife, Travelers, TIAA and W.R. Berkley) and 7 in Asia and the Pacific (MS&AD, Ping An, QBE, Samsung Fire & Marine, Sinosure, Sompo and Tokio Marine).
The group explained the UN Intergovernmental Panel on Climate Change (IPCC) has warned that if global temperature increases are to be limited to 1.5°C without relying on carbon capture and storage technologies yet to be proven viable, oil consumption must decrease by 37% by 2030 and 87% by 2050. Gas consumption must decrease by 25% by 2030 and 74% by 2050.
Oil Change International has found that CO2 emissions from the oil, gas and coal in existing fields and mines will push the world far beyond 1.5°C of warming and will exhaust a 2°C carbon budget. However, governments are planning to increase oil production from 100 to 120 million barrels per day (mb/d) between now and 2040 – three times the level of about 40 mb/d which is compatible with limiting global warming to 1.5°C.
Data on oil and gas insurance premiums is not publicly available. Unfriend Coal / Insure Our Future said they have identified key players from separate reports published by consulting agencies Finaccord and HTF Market Intelligence and follow-up market research conducted by both agencies independently of each other.
Each agency produced lists of the top 15 oil and gas property and casualty insurers and, despite differences in rankings, ten companies were common to both lists:
- Four are members of the Net-Zero Asset Owners Alliance, which have pledged to align their investment portfolios with a maximum 5°C of warming – Allianz, AXA, Munich Re and Zurich.
- Seven have already limited support for fossil fuels by restricting insurance for coal – Allianz, AXA, Chubb, Liberty Mutual, Munich Re, The Hartford and Zurich.
- Three have taken no action on fossil fuel insurance – AIG, Travelers and Tokio Marine.
Burning coal is the biggest single source of CO2 emissions, accounting for 40.3% of global CO2 emissions in 2018 (not including emissions from land use changes for which no recent data exist). However, the combustion of oil and gas accounted for 55.6% in the same year.
NGOs supporting the Unfriend Coal campaign have up to now focused their activities on campaigning for insurers to stop underwriting and investing in coal, but they are now widening the campaign to cover all fossil fuels that are inconsistent with international climate targets. To mark the change the campaign is rebranding as Insure Our Future – the label under which it has operated in the United States since 2018.
The Unfriend Coal / Insure Our Future letter calls on the CEOs and their insurers to:
- Immediately cease insuring new oil or gas expansion projects;
- Commit to phasing out insurance for oil and gas companies in line with a 5°C pathway;
- Immediately cease insuring new coal projects and coal companies;
- Divest all assets from oil, gas and coal companies that are not in line with a 5°C pathway;
- Bring stewardship activities in line with a 5°C pathway in a transparent way, including forceful advocacy for a green and just recovery from COVID-19.
Peter Bosshard, Global Coordinator of the Unfriend Coal / Insure Our Future Campaign, said: “The massive disruption of the fossil fuel industry due to COVID-19 offers an opportunity to accelerate the required low-carbon transition. At a time when powerful governments are bailing out politically well-connected oil and gas companies, the insurance industry needs to stand up as a voice of reason and bring scientific evidence into the decision-making process about high-carbon projects.”
Elizabeth Bast, Executive Director of Oil Change International, added: “Insurers are in the business of understanding risk. They understand why the world must rapidly transition away from all fossil fuels and are already taking action to phase out coal. Now they must take the next step by phasing out support for the oil and gas industry. Insurers cannot be climate leaders if they continue to backstop oil and gas expansion. Instead, they should aim to mitigate climate risks of all kinds by pursuing a managed phase-out of fossil fuel production.”
Michael Mann, Distinguished Professor and Director of the Earth System Science Center, Penn State University, said: “Climate change is not a distant and far-off threat. Unprecedented weather extremes are impacting communities right now, and the insurance industry is already reeling from these climate-fueled disasters. It makes no sense for insurers to underwrite the industries that are most responsible for the warming of our planet. Insurance companies – which claim to be proponents of scientific rigor and risk management – must stop insuring coal, oil and gas expansion and phase out all fossil fuel business in line with 1.5°C.”
Unfriend Coal added since its campaign launched three years ago, 19 major insurers have adopted policies to end or limit insurance for the coal industry. These insurers control over 13.6% of the primary insurance market and 47.6% of the reinsurance market. Insurers have also divested coal from roughly $9 trillion of investments – over one-third (37%) of the industry’s global assets.