Reinsurers feel the heat as climate groups urge end of fossil fuel cover

As reinsurers gathered for their annual meeting in the German spa town of Baden Baden climate protestors have accused them of “ruining people’s lives” and with it their own business models.

Campaign groups Urgewald and the Insure Our Future network have called on reinsurers to  end what they described as their continued unqualified support of the fossil fuel industry, emissions from which are the prime contributor to global climate change.

In a statement the two groups said reinsurance companies, have been faced with the huge and rising costs of natural catastrophes, increasing substantially in recent years, in large part due to climate change. The risk models used by reinsurance companies have repeatedly failed to properly account for climate-related damages, which cost the insurance industry $120 billion in 2022 alone they added.

To try and stem their losses, some reinsurance companies have exited or significantly reduced their capacity in the natural catastrophe market, while others have raised their prices very significantly and these costs are passed on ultimately to consumers, campaigners continued. At the same time, some primary insurers have stopped providing cover to households and businesses most impacted by climate change or raised the premiums in these regions to unaffordable levels.

“In light of the worsening climate crisis and the urgent calls for action made by the Intergovernmental Panel on Climate Change, the world’s foremost authority on climate change, Urgewald and Insure Our Future repeat their demand for all reinsurers attending the Baden-Baden congress to immediately stop all insurance and investments in fossil fuel expansion,” the statement added. “In addition, reinsurers must immediately provide a concrete 1.5°C -aligned phase-out plan for all remaining fossil fuel projects and companies.”

Regine Richter, finance campaigner for Urgewald said reinsurers needed to take decisive action for their clients and their shareholders alongside those affected by the changing climate.

“The reinsurance industry is ruining people’s lives and their own business model by their continued underwriting of fossil fuel companies,” she explained. “They aim for short-term profits, which their customers and climate victims have to pay for, but the climate crisis will make increasingly large parts of the planet uninsurable sooner or later. They need to act now.”

Lindsay Keenan, European coordinator of Insure Our Future, said there were those in the industry who were failing to address the need to move away from fossil fuel production. “The chief executives of re/insurers, including Peter Zaffino of AIG and John Neal of Lloyd’s of London, should be ashamed. They continue to insure and invest in fossil fuel companies with little or no restriction and are accomplices in climate crimes,” he said. “Continuing to re/insure fossil fuels is a toxic recipe for disaster for the whole world. CEOs like Joachim Wenning of Munich Re and Christian Mumenthaler of Swiss Re can take some pride in the restrictions they have placed on reinsuring some fossil fuels, but we remind them that real climate leaders also do not insure new fossil gas infrastructure or US coal mines.”