The increasing frequency and severity of extreme weather events across the globe has been noted by studies. The specific types of weather events include hurricanes, extreme precipitation, tornadoes, landslides, mudflows, drought, wild fires, heat waves, flash floods and rising sea levels.
It is sobering to realize that only a little over a fourth of the losses due to natural disasters In 2016 were covered by insurance. That is, over a 100 billion pounds worth of losses in 2016, were not covered by insurance and the owners of the assets or services affected, had to bear those losses.
The increasing severity of weather events has been linked to continued fossil fuel use, dumping more and more CO2 every day in the earth's atmosphere, increasing its 'blanket' such that the heat from the sun cannot fully be released back into space.
The insurance industry is one of the world’s biggest institutional investors in fossil fuels.
In the United States, the city of San Francisco has potentially become the first US municipal body to try to force insurance companies to stop insuring and investing in fossil fuels.
Fossil fuels were long considered a ‘safe bet’ until climate scientists declared that the bulk of all known reserves had to stay in the ground if humanity is to limit global warming to 1.5ºC. The risk lies in these fossil fuel investments becoming what is known as stranded assets, which essentially means investments in coal, oil and gas could potentially suffer from a sudden and unexpected drop in value as society puts measures in place to prevent their use.
Whether it’s a drop in demand, new legislation or the threat of legal action, the sheer speed and unanticipated manner in which these factors could take hold could, at some point in the not to distant future, render the bulk of the insurance industry’s fossil fuel investments worthless.
There is also the question of what the insurance industry chooses to insure, or rather, not insure. Fossil fuel companies can’t operate their facilities or build new power plants without insurance coverage. They depend on insurers to cover the legal, financial and natural risks of their projects. Coal has been highlighted as the most carbon heavy of all fossil fuels generating not only nearly half of the world’s CO2, but also creating the most atmospheric pollution.
Researchers have concluded that we cannot afford to build any new coal power plants and have to retire existing plants early in order to meet the goals of the Paris Agreement and avoid the worst impacts of runaway climate change. Yet there are currently 1,600 new coal plants planned globally. If the insurance industry was to cease underwriting such intensive fossil fuel production sites it is likely that many of these projects would never go ahead.
However, in spite of their rhetoric, insurers continue to enable climate-destroying coal projects. They offer insurance coverage without which these projects could not go forward, and have invested more than 500 billion dollars in fossil fuel companies.
An increasing number of insurance companies have divested from providing insurance coverage and investment funds to new coal projects, they are selling holdings in coal companies and refuse to underwrite their operations.
Fifteen insurance compaies have fully or partially halted financial relations with coal companies, representing $4 trillion in global assets. The first-movers, including Allianz, Aviva, AXA and SCOR, are almost exclusively located in Europe and represent 13 percent of all global insurance assets.
Allianz recently pledged to immediately withdraw from insuring single coal-fired power plants and coal mines, either in operation or planning. Zurich insurance Group announced in nov 2017 that it will stop providing insurance or risk management services for new thermal coal mines or for potential new clients that derive more than half their revenue from mining thermal coal. It will also stop supporting utility companies that generate more than 50 percent of their electricity from coal. Swiss Re and Lloyd’s will also be announcing plans to divest from coal in the coming months. AXA and Swiss Re have also limited their underwriting of tar sands projects
Unfortunately when it comes to the climate change time horizon, the very industry which could have more impact than any other is clearly not taking action quickly enough. Even the bold pledge by Allianz has significant limitations, as the company also stated it will continue to insure businesses that generate power though multiple fossil fuel sources, including coal, until 2040.
The eight top US insurance companies that do not consider climate change in their investments are State Farm, Allstate, Liberty Mutual, Berkshire Hathaway/Geico, Travelers, Nationwide, Progressive and USAA. Only one US insurance company, Lemonade, has pledged not to support fossil fuels.
It is sobering to realize that only a little over a fourth of the losses due to natural disasters In 2016 were covered by insurance. That is, over a 100 billion pounds worth of losses in 2016, were not covered by insurance and the owners of the assets or services affected, had to bear those losses.
The increasing severity of weather events has been linked to continued fossil fuel use, dumping more and more CO2 every day in the earth's atmosphere, increasing its 'blanket' such that the heat from the sun cannot fully be released back into space.
The insurance industry is one of the world’s biggest institutional investors in fossil fuels.
In the United States, the city of San Francisco has potentially become the first US municipal body to try to force insurance companies to stop insuring and investing in fossil fuels.
Fossil fuels were long considered a ‘safe bet’ until climate scientists declared that the bulk of all known reserves had to stay in the ground if humanity is to limit global warming to 1.5ºC. The risk lies in these fossil fuel investments becoming what is known as stranded assets, which essentially means investments in coal, oil and gas could potentially suffer from a sudden and unexpected drop in value as society puts measures in place to prevent their use.
Whether it’s a drop in demand, new legislation or the threat of legal action, the sheer speed and unanticipated manner in which these factors could take hold could, at some point in the not to distant future, render the bulk of the insurance industry’s fossil fuel investments worthless.
There is also the question of what the insurance industry chooses to insure, or rather, not insure. Fossil fuel companies can’t operate their facilities or build new power plants without insurance coverage. They depend on insurers to cover the legal, financial and natural risks of their projects. Coal has been highlighted as the most carbon heavy of all fossil fuels generating not only nearly half of the world’s CO2, but also creating the most atmospheric pollution.
Researchers have concluded that we cannot afford to build any new coal power plants and have to retire existing plants early in order to meet the goals of the Paris Agreement and avoid the worst impacts of runaway climate change. Yet there are currently 1,600 new coal plants planned globally. If the insurance industry was to cease underwriting such intensive fossil fuel production sites it is likely that many of these projects would never go ahead.
However, in spite of their rhetoric, insurers continue to enable climate-destroying coal projects. They offer insurance coverage without which these projects could not go forward, and have invested more than 500 billion dollars in fossil fuel companies.
An increasing number of insurance companies have divested from providing insurance coverage and investment funds to new coal projects, they are selling holdings in coal companies and refuse to underwrite their operations.
Fifteen insurance compaies have fully or partially halted financial relations with coal companies, representing $4 trillion in global assets. The first-movers, including Allianz, Aviva, AXA and SCOR, are almost exclusively located in Europe and represent 13 percent of all global insurance assets.
Allianz recently pledged to immediately withdraw from insuring single coal-fired power plants and coal mines, either in operation or planning. Zurich insurance Group announced in nov 2017 that it will stop providing insurance or risk management services for new thermal coal mines or for potential new clients that derive more than half their revenue from mining thermal coal. It will also stop supporting utility companies that generate more than 50 percent of their electricity from coal. Swiss Re and Lloyd’s will also be announcing plans to divest from coal in the coming months. AXA and Swiss Re have also limited their underwriting of tar sands projects
Unfortunately when it comes to the climate change time horizon, the very industry which could have more impact than any other is clearly not taking action quickly enough. Even the bold pledge by Allianz has significant limitations, as the company also stated it will continue to insure businesses that generate power though multiple fossil fuel sources, including coal, until 2040.
The eight top US insurance companies that do not consider climate change in their investments are State Farm, Allstate, Liberty Mutual, Berkshire Hathaway/Geico, Travelers, Nationwide, Progressive and USAA. Only one US insurance company, Lemonade, has pledged not to support fossil fuels.
