Insurers told to stand up to political threats on climate action

Climate campaigners say global insurers should not have staged a mass exodus from the United Nations’ net zero insurance group in the face of threats from attorney generals from states across the USA.

In the past month, numerous insurers have departed the Net Zero Insurance Alliance (NZIA) from what Insure our Future says was “pressure from climate denying politicians and officials in the United States”.

A few members of NZIA leaving the alliance in April turned into a stampede in the second half of May. As of 5 June, 17 companies have left the NZIA. This includes six of the alliance’s founder members: AXA, Allianz, Munich Re, SCOR, Swiss Re and Zurich. Out of this founding group of large European (re)insurers, only Aviva and Generali are left. The alliance is now less than half the size it was at the start of the year.

The resignations were prompted by a letter from 23 US state attorneys general (AGs) threatening NZIA members with potential antitrust legal action.

Insure our Future said: “The letter is a brazenly political attack which accuses insurers of advancing an ‘activist climate agenda’. It absurdly blames high inflation on the so-far moderate steps a small minority of insurers have taken to reduce insurance for fossil fuel companies while ignoring the role that fossil fuel dependence and climate change have played in recent global price rises.”

In the letter the AGs said: “The push to force insurance companies and their clients to rapidly reduce their emissions has led not only to increased insurance costs, but also to high gas prices and higher costs for products and services across the board, resulting in record-breaking inflation and financial hardships for the residents of our states.”

However campaigners say it is the extreme weather events caused by the changing climate which us hitting the insurance industry hardest.

“It is of course the impacts of climate change that are pushing up insurance costs and causing parts of the world to become uninsurable,” the group said. “Since the early 1990s, global natural catastrophe insured losses have been growing at an annual rate of 5-7% and have averaged about $100 billion over the past five years, with 71% of these losses in North America. They have also destroyed the food security and livelihoods of millions of people in poor countries who have contributed the least to climate change.

“The response from both reinsurers and primary insurance companies to soaring losses has been to hike prices, limit coverage and even exit some markets. Homeowners in regions most exposed to storms and fire are feeling the consequences through steep hikes in property insurance rates.

“Two of the largest home insurers in California have just left the market due to wildfire risks. The Florida homeowners insurance market is in a state of crisis (due to both fraud and massive hurricane damage) which is only likely to deepen.”

As such it said far from running from the pledge to deliver net zero insurers should be doing more.

“The antitrust threat made by the US state attorneys general is widely considered to be without merit as the NZIA obliges its members to set (weak) targets and report progress, but not to take specific actions. Meant to protect consumers from price-fixing, antitrust law is being used as a political weapon by fossil fuel industry-funded politicians to scare insurers from taking legitimate and necessary climate action.”

“The insurance industry has for decades been aware of the causes and serious consequences of climate change and its business model is being shaken by repeated multi-billion dollar climate disasters,” Insure our Future stated. “Insurers and their trade associations need to go on the offensive and send a clear message that insurance will scale up climate action and take on the fossil fuel industry and its climate denying political servants.”

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