Don Jergler | Insurance Journal | March 14, 2019
Expect calls for the insurance industry to stop investing in or insuring the fossil fuel industry and fossil fuel projects to grow louder in California and throughout the U.S.
A new petition by several climate change and consumer activist groups will be calling for new California Insurance Commissioner Ricardo Lara to not only require insurers doing business in the state to disclose their investments in fossil fuels, but to disclose which fossil fuel projects and companies they are insuring.
The groups expect to finalize and begin circulating the petition in the next week or so.
Former Insurance Commissioner Dave Jones in 2016 called on insurance companies to voluntarily divest from thermal coal investments and required insurers with more than $100 million in annual premium to disclose publicly their investments in fossil fuels.
Jones also established the Climate Risk Carbon Initiative, which includes information on the amount of oil, gas, coal and utilities investments held by insurance companies, and whether the insurers have divested from thermal coal, the amount of thermal coal divested and any future commitments to divest.
The new initiative, which seeks to reach much further than the numerous climate change moves Jones implemented during his long tenure as the state’s top insurance regulator, was outlined a few weeks ago in a webcast, “Stop Insuring Climate Chaos: How to Get the U.S. Insurance Industry to Ditch Fossil Fuels.” The webcast laid out plans for climate change activists to beef up their pressure on the industry to stop investing in and insuring fossil fuel companies and projects.
The new push by the groups signals a shifting of focus from pressuring the financial industry to get out of fossil fuels to specifically targeting the insurance industry. The same groups were behind pushes to get the Norwegian Sovereign Wealth Fund in 2015 to divest an estimated $8 billion from the coal sector, and more recently BNP Paribas Asset Management, became the last of more than 100 major financial institutions to divest from coal, a total of $1 billion in their case.
Touting this as a part of “a new strategy to keep fossil fuels in the ground,” the activists that put on the webinar talked about the need to step things up in the wake of messaging delivered by the U.N. Intergovernmental Panel on Climate Change in October that keeping the rise in global warming to 1.5C was possible only through rapid and unprecedented changes in human behavior.
“We believe that the insurance industry is a promising lever to scale up climate action,” said Peter Bosshard, with The Sunrise Project, one of the webinar hosts and an activist group whose mission is to scale social movements to rapidly drive a global transition from fossil fuels to renewable energy.
Other groups involved in the webinar included the Rainforest Action Network and Insure Our Future.
The three groups drew attention to their cause in 2018 by protesting outside the National Association of Insurance Commissioners meeting in San Francisco in insurance industry mascot costumes, including Flo, Jake, and the Gecko, to call out the industry for its investments in fossil fuel assets and its coverage of companies and projects that produce carbon.
The idea behind the movement is that coal is believed to be the biggest source of CO2 – despite that, there are more than 1,000 new coal projects said to be in the pipeline – and without insurance these projects wouldn’t happen.
“Almost no pipeline or coal power plant would get funding or government permits to get built” without insurance, Bosshard said.
Numerous European insurers have been for some time divesting from fossil fuels and curtailing underwriting of fossil fuel companies and projects, including insurance giants AXA, SCOR, Zurich, Allianz, Swiss Re, Munich Re, Generali and VIG.
The CEO of Mapfre, an insurer in Spain and Latin America, announced on March 8 that his company would stop underwriting new coal mines and power plants, and would no longer invest in companies that derive more than 30 percent of their revenue from coal.
On Thursday, Austrian insurer Uniqa Group announced it will stop insuring new coal plants and mines.
The groups are setting their sights on U.S. insurers, where they say little action has been taken to curtail underwriting fossil fuel projects or companies.
Elana Sulakshana, with the Rainforest Action Network, said the groups have been attempting to correspond with 22 large U.S. insurers since July, but have gotten nowhere.
So she’s calling for the need to scale up corporate campaigning and tie-in insurers with fossil fuel projects they insure to get that information out to the public to create pressure on carriers.
“This is a way to really cut off these projects before they get going,” she said.
Mary Sweeters, with Insure Our Future, believes public entities are a key to getting insurers out of the fossil fuel industry.
The San Francisco Board of Supervisors in 2018 became what is believed to be the first U.S. municipal body to try to force insurance companies to stop insuring and investing in fossil fuels when the board voted unanimously in favor of a resolution to urge the city to screen insurers for their investments in coal and tar sands.
“At the very least businesses and cities can communicate to insurers their concerns about the issue,” Sweeters said. “And (tell them) that there’s a potential for them to look elsewhere if they don’t change their policies.”
Expect the groups to be taking San Francisco’s example to other municipalities across the U.S.
“We’re really excited about this as a potential model that other cities can take up across the country,” she said.