Insurers told they are still failing to meet climate responsibilities

Fifty years after the insurance industry first warned about the impact of climate change it is continuing to fuel the climate emergency, The Insure Our Future campaign has today issued  its seventh annual scorecard on insurers’ climate policies,  and warned there is still not enough being done to make a real impact in climate change and the use of fossil fuels.

Campaigners said the growing frequency and severity of floods, hurricanes, wildfires, droughts and other climate-related disasters has seen insurance payouts for natural catastrophes soar to an average $110 billion a year since 2017, more than twice the average over the previous five years. Insurers are now declining to insure homeowners in markets at greatest risk.

It added however, the report reveals that most insurers continue to support projects to increase oil and gas production, even though the world’s leading climate scientists at the Intergovernmental Panel on Climate Change and experts at the International Energy Agency agree that this is incompatible with the 1.5°C Paris climate target.

Fossil fuel insurance earned the industry around $21.25 billion in 2022, according to research commissioned for the report from Insuramore. It found insurers in the Lloyds of London market collectively are the world’s biggest fossil fuel underwriters with an estimated $1.6-$2.2 billion in annual premiums. The top ten individual insurers include AEGIS, Chubb, Allianz, AXA, Fairfax Financial, Zurich, W. R. Berkley and AIG.

Peter Bosshard, global coordinator of the Insure Our Future campaign, said: “The insurance industry first warned about climate risks in 1973, and these have now become a grim reality, particularly for low-income countries and communities which have contributed least to the climate emergency. Insurance companies are now abandoning customers affected by climate risks, yet they continue to fuel the climate crisis by underwriting and investing in the expansion of fossil fuels.

“If insurance companies took climate science seriously, they would fully align their underwriting and investment strategies with a credible 1.5°C pathway and end all support for increased fossil fuel production. They would be suing fossil fuel companies, to make polluters pay for the growing costs of climate disasters and keep insurance affordable for climate-affected communities,” added Hilda Flavia Nakabuye, of Fridays For Future Uganda. “Insurance companies are in a powerful position to protect people and the planet. They need to truly protect communities impacted by the climate crisis, rather than supporting the fossil fuel industry and prioritising profit.”

Insure our Future added Munich Re published the insurance industry’s first warning about the growing risks of climate change in August 1973, stating that rising temperatures would lead to “retreat of glaciers and polar caps, shrinking of lake surfaces and an increase in marine temperatures”.

“Fifty years on, fossil fuel consumption and CO2 emissions continue to increase,” it added. “Thousands of new fossil fuel projects are in the pipeline, and the scorecard warns that if they are insured and built, they ‘will lock in increased consumption for decades to come and will completely destroy our chances of limiting global warming to 1.5°C’.”

Fifty Years of Climate Failure: 2023 Scorecard on Insurance, Fossil Fuels and the Climate Emergency, scores and ranks the climate policies of 30 major insurers and is published by 22 organisations from 12 countries. This year, as a symbol of insurers’ failure to adequately respond to the climate emergency, it leaves the first three places in its ranking table empty.

Fossil Fuel Insurance: Allianz ranks highest for its overall policies followed by Generali, Aviva and Swiss Re.

Coal Insurance: Allianz is the only company to score 10/10. It is followed by AXA, Swiss Re and Generali.

Oil & Gas Insurance: Aviva and Generali have the strongest restrictions but score just 4.0/10. Only they and German insurers Allianz, Hanover Re, Talanx and Munich Re, ranked 3rd, 4th, 6th and 7th, have ceased insuring new oil and gas production without major exceptions. None of the 30 insurers have ended cover for new gas power plants, and almost none have ended support for a wave of new liquefied fossil gas (LNG) terminals.

“Insurers have continued to introduce restrictions on coal, and although progress has slowed, coal companies are finding it ever harder to get insurance for new projects and, increasingly, for existing operations,” The report explained. “Insuramore calculates that insurance companies with a 41.2% share of the commercial property and casualty market and a 62.7% share of the reinsurance market have now taken action, up from 39.8% and 58.2% respectively in 2022.

Far fewer insurers have introduced policies on oil and gas, and restrictions are much more limited than on coal. Companies with a 19.6% share of the commercial property and casualty market and 46.7% share of the reinsurance market have taken action, up from 15.4% and 43.4%, according to Insuramore.

The scorecard  added: “Insurers talk a lot about the need for oil and gas companies to transition away from fossil fuels. In reality, they are not advocating for a transition away from fossil fuel extraction but are satisfied if fossil fuel companies adopt shallow net zero commitments, shift from coal to gas extraction, invest in renewable energy projects and reduce their operational emissions. This does nothing to reduce the climate impact of burning the oil and gas these companies sell, which is by far the biggest part of their life-cycle emissions.”

Fossil fuel insurance earned the industry around $21.25 billion in 2022, according to research commissioned for the report from Insuramore. It found insurers in the Lloyds of London market collectively are the world’s biggest fossil fuel underwriters with an estimated $1.6-$2.2 billion in annual premiums.

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