Why the Insurance Industry?

Coal insurance profit cycle.jpg

Insurance companies are supposed to protect us from catastrophic risks. Yet when it comes to the largest threat to humanity – climate change – insurers are fueling dangerous global warming by perpetuating our dependence on dirty fossil fuels.

You can’t drive a car or buy a house without insurance. Likewise, without insurance, energy companies cannot build or operate destructive fossil fuel projects like the Keystone XL pipeline, coal-fired power plants, oil drilling in the Arctic, or liquid natural gas export facilities and pipelines.

HOW Insurers prop up fossil fuels


Insurance coverage allows carbon-intensive projects such as coal plants and tar sands mines and pipelines to be built and operated.

Once built, fossil fuel infrastructure locks us into dirty and expensive energy that is causing climate change and harming public health. 


Insurance companies invest customers’ premiums in fossil fuel companies - that is how they make money. The 40 largest US insurers hold over $450 billion in coal, oil, gas and electric utility stocks and bonds. They hold a bigger proportion of their investments in fossil fuels than average index funds.

As the ultimate manager of risk, the insurance industry quietly shapes modern society, deciding what type of projects can be built and operated. Insure Our Future is holding insurers accountable for their continued support of fossil fuels.

More than 4 degrees Celsius of warming this century would make the world ‘uninsurable.’
— Thomas Buberl, Chief Executive Officer of AXA

Insurers know the risks of global warming, yet they enable the companies causing it

Insurers were among the earliest voices warning about the risk of runaway climate change, which makes their support of fossil fuels particularly hypocritical.

Insurers are in the business of risk management. They are experts at modeling catastrophe risk, pricing risk, and designing preventive measures. With an eye to the future, leading insurers were among the first to publicly acknowledge climate change and to call for action in the 1970s. But more than 40 years later, the industry is still one of the major enablers of the fossil fuel industry.

It is a perverse loop that allows insurers to facilitate polluting projects that cause global warming while at the same time providing insurance against the climate impacts of these same projects.
— Bill McKibben, founder of 350.org

The US insurance industry is lagging behind

Insurers already consider the impact of climate change and extreme weather when calculating premiums and policy coverage.

Several international insurers are taking action on this - and leaving U.S. insurers behind. Since 2015, 20 international insurers have divested about $30 billion from coal companies, and nine, including Allianz, Axa, Zurich, Generali and Swiss Re, have stopped or limited insuring the coal industry. Several of these insurers, including Allianz, AXA and Zurich, offer their services in the United States.

Yet this knowledge doesn’t translate into preventative action among the vast majority of US insurers. No major US insurance company has pledged to stop insuring risky fossil fuel projects or to stop investing in the dirty energy sector.

Interestingly, several small and medium-sized U.S. insurance companies have recently reported to the California Department of Insurance that they have divested their assets in coal companies and have no intention of investing in the coal sector in the future. And the online insurance company Lemonade has not only pledged to never invest in fossil fuels, but has also called on the U.S. insurance industry to stop insuring risky fossil fuel projects.

In the investments and underwriting that insurers lavish on fossil fuel companies, they act like climate deniers, ignoring the overwhelming scientific evidence that the emissions they finance are producing a slow-motion cataclysm.
— Jacques Leslie


With European insurers exiting the coal sector, U.S. insurers have an outsized role in deciding whether new coal plants can be built or operated.

The world must completely phase out coal to stop runaway climate change, yet there are currently 1,380 new coal-fired power plants under construction or in the construction pipeline. Without insurance, most new coal projects could not be financed and built, and most existing coal facilities would have to close.

Only a small group of insurers have the ability to conduct due diligence for power plants in Asia, where most new coal projects are proposed. With international insurers exiting the sector, U.S. insurers are offering a lifeline to these disastrous projects.

Finding alternative sources [of coal insurance] is likely to become increasingly challenging – especially if North American insurers begin to follow the European lead.
— -Mining Risk Review 2018, Willis Tower Watson

Climate change destroys property covered by insurance


Climate change impacts the value of assets

Insurers who invest premiums in dirty energy companies stand to lose billions as the world transitions to a lower-carbon economy.

This is already happening. From 2011 to 2016, coal companies lost more than 90 percent of their value due to decreased demand for coal. As more clean energy comes online, other dirty energy project will lose their value, leaving insurers invested in stranded assets.

Insurers are already feeling the squeeze from some of its effects. Increased intensity and frequency of extreme weather (such as hurricanes, wildfires and floods) and rising sea levels means more people are impacted by climate change - and many  are filing insurance claims.

In 2017, North America experienced $244.2 billion in total economic losses thanks to three enormous hurricanes and wildfires ravaging the west. Of that, $119.1 billion were insured losses.

California regulators estimated wildfires in 2017 caused around $12.6 billion in insured losses, a number that will likely be eclipsed by the 2018 fires. Already one insurance company - Merced Property & Casualty Co. - is in financial ruins, unable to pay millions of dollars to policyholders.