Revealed – insurers covering the most fossil fuels
Revealed – insurers covering the most fossil fuels | Insurance Business Asia
Environmental
Revealed – insurers covering the most fossil fuels
Campaign calls on industry to support climate target
Environmental
By
Kenneth Araullo
The Insure Our Future campaign warns today in its seventh annual scorecard on insurers’ climate policies that despite the insurance industry’s initial warnings about the climate emergency 50 years ago, insurers are still contributing to the crisis by supporting fossil fuel projects.
Most insurers continue to back projects that increase oil and gas production, a stance incompatible with the 1.5°C Paris climate target set by leading climate scientists. According to research by Insuramore, fossil fuel insurance earned the industry around $21.25 billion in 2022.
Insuramore estimates that insurers at Lloyd’s of London collectively underwrite the most fossil fuel policies, with estimated annual premiums ranging between $1.6-$2.2 billion. The top 10 insurers in the fossil fuel sector are as follows:
Top 10 fossil fuel insurers in 2022
Rank
Name
Country of HQ
Premium range (millions)
Midpoint
1.
AEGIS
Bermuda
1,550-1,850
1,700
2.
PICC
China
1,250-1,650
1,450
3.
Sogaz
Russia
800-1,100
950
4.
Chubb
USA
550-850
700
5.
Allianz
Germany
475-775
625
6.
AXA
France
450-750
600
6.
Fairfax Financial
Canada
450-750
600
6.
Zurich
Switzerland
450-750
600
9.
W.R. Berkley
USA
525-625
575
10.
AIG
USA
425-675
550
Natural disasters like floods, hurricanes, wildfires, and droughts have led to a surge in insurance payouts, averaging $110 billion annually since 2017. However, insurers are now declining to insure homeowners in the riskiest markets.
Munich Re, the first to warn about the climate risks in 1973, observed that rising temperatures would lead to environmental changes. However, despite these warnings, fossil fuel consumption and CO2 emissions continue to rise. Thousands of new fossil fuel projects are in progress, posing a threat to limiting global warming to 1.5°C.
Climate change’s effects on insurance
The Global Energy Monitor reports numerous proposed or under-construction fossil fuel projects, including coal, oil, and gas extraction projects, coal power plants, LNG import terminals, gas, and oil pipelines, among others.
Insurers are experiencing increased financial risks due to climate change. Reinsurance capital decreased by 20-25% in 2022, causing a spike in premiums. Major insurers like AIG Re, AXIS Capital, AXA XL, Everest Re, and SCOR reduced cover or withdrew from the property market.
In response to escalating climate disasters, primary insurers covering over two-fifths of California’s home insurance market have withdrawn. State Farm, Allstate, Chubb, Tokio Marine, AIG, and Berkshire Hathaway’s AmGUARD are among those that left, impacting homeowner vulnerability and property values.
Leading insurers that joined the Net Zero Insurance Alliance have also faced criticism for not fulfilling their commitments. Twenty out of 31 members left the alliance under the threat of anti-trust action in the US. Only a few have published transition plans and net zero targets, failing to adopt targets to reduce their absolute insured emissions by 34%.
“The insurance industry first warned about climate risks in 1973, and these have now become a grim reality, particularly for low-income countries and communities which have contributed least to the climate emergency. Insurance companies are now abandoning customers affected by climate risks, yet they continue to fuel the climate crisis by underwriting and investing in the expansion of fossil fuels,” Insure Our Future global coordinator Peter Bosshard said.
“If insurance companies took climate science seriously, they would fully align their underwriting and investment strategies with a credible 1.5°C pathway and end all support for increased fossil fuel production. They would be suing fossil fuel companies, to make polluters pay for the growing costs of climate disasters and keep insurance affordable for climate-affected communities,” Bosshard said.
“A symbol of insurers’ failure”
The 2023 Scorecard on Insurance, Fossil Fuels, and the Climate Emergency, a report collated by 22 organisations across 12 countries, extensively evaluates the climate policies of 30 major insurers. Notably, the current report features a significant symbolic gesture, leaving the top three places vacant in its ranking table, emblematic of insurers’ insufficient response to the ongoing climate emergency.
(Re)insurer
Category
Country
Coal Insurance
Oil and Gas Insurance
Total Ranking
*
1
*
2
*
3
Allianz
Insurer
DE
1
3
4
Generali
Insurer
IT
4
1
5
Aviva
Insurer
UK
6
1
6
Swiss Re
Reinsurer
CH
3
5
7
AXA
Insurer
FR
2
9
8
Hannover Re
Reinsurer
DE
9
4
9
Axis Capital
Reinsurer
BE
5
13
10
Zurich
Insurer
CH
7
11
11
Munich Re
Reinsurer
DE
10
7
12
SCOR
Reinsurer
FR
8
10
13
HDI Global – Talanx
Insurer
DE
12
6
14
Mapfre
Insurer
ES
11
8
15
QBE
Insurer
AU
13
15
16
AIG
Insurer
US
14
14
17
Chubb
Insurer
US
16
12
18
Sompo
Insurer
JP
16
16
19
Tokio Marine
Insurer
JP
16
17
20
MS&AD
Insurer
JP
16
17
20
Samsung FM
Insurer
KR
15
17
22
The Hartford
Insurer
US
16
20
23
Travelers
Insurer
US
16
20
24
Ping An
Insurer
CN
22
23
25
Liberty Mutual
Insurer
US
22
23
26
Lloyd’s
Reinsurer
UK
24
22
27
Berkshire Hathaway
Reinsurer
US
25
23
28
Everest Re
Reinsurer
BE
25
23
28
PICC
Insurer
CN
25
23
28
Sinosure
Insurer
CN
25
23
28
Starr
Insurer
US
25
23
28
WR Berkley
Insurer
US
25
23
28
In the assessment of fossil fuel insurance policies, Allianz leads the rankings for its comprehensive approach, with Generali, Aviva, and Swiss Re following closely behind.
When evaluating coal Insurance, Allianz stands as the sole company with a perfect 10/10 score, followed by AXA, Swiss Re, and Generali, illustrating their prominent policies in this sector.
Concerning oil & gas insurance, Aviva and Generali showcase robust limitations, though their scores are at 4.0/10. Notably, these companies, alongside German insurers Allianz, Hanover Re, Talanx, and Munich Re, positioned at 3rd, 4th, 6th, and 7th places respectively, have ceased new insurance for oil and gas production with few major exceptions.
However, none of the 30 insurers have terminated coverage for new gas power plants, and only a minimal few have withdrawn support for the upcoming surge of liquefied fossil gas (LNG) terminals.
“Insurers talk a lot about the need for oil and gas companies to transition away from fossil fuels. In reality, they are not advocating for a transition away from fossil fuel extraction but are satisfied if fossil fuel companies adopt shallow net zero commitments, shift from coal to gas extraction, invest in renewable energy projects and reduce their operational emissions. This does nothing to reduce the climate impact of burning the oil and gas these companies sell, which is by far the biggest part of their life-cycle emissions,” the scorecard said.
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