More than 60 environmental activist groups have signed a petition requesting California’s new insurance commissioner require insurance companies to publicly disclose their investments in fossil fuel-related companies and any fossil fuel projects they underwrite or insure.
The requirement would apply to the more than 1,300 insurance companies licensed in California, the nation’s largest insurance market.
The petition, sent by environmental activists to Insurance Commissioner Ricardo Lara on March 21, links insurance companies’ investments in and underwriting of fossil-fuel-related companies to climate change and an increased frequency and severity of wildfires and other extreme weather events.
The coalition is led by Consumer Watchdog, and other members include the California Environmental Justice Alliance, the Center for International Environmental Law, the Public Citizen, the Rainforest Action Network, and 350.org.
The petition contends insurers are threatening their own success by insuring and investing in fossil-fuel-related businesses. The petition says insurers could become insolvent by being forced to cover billions of dollars in losses resulting from extreme weather events tied to climate change driven by fossil fuel use.
Facing Ruinous Climate Payouts?
The petition ties recent natural disasters to fossil fuel use.
According to the California Department of Insurance, wildfires in 2018 resulted in 46,000 claims totaling $11.4 billion in insured losses, including damage to more than 28,500 homes, 10,564 of which were destroyed. About 10,000 vehicles and other miscellaneous property items suffered wildfire damage. Insurers also paid out millions of dollars to fossil fuel companies in 2018 for losses related to accidental catastrophes such as oil spills and natural gas pipeline leaks.
“To ensure the solvency of the insurance industry and protect consumers in California, we request that you immediately initiate a rulemaking proceeding and promulgate emergency regulations to require all insurance companies licensed to conduct business in California to fully disclose: (1) all their investments in fossil fuel-related entities, and (2) all the fossil fuel-related companies and projects that they underwrite or otherwise insure,” the petition states.
“By insuring the fossil fuel projects responsible for the increased intensity of wildfires, mudslides, and flooding, insurance companies fuel the very disasters they are insuring homeowners against,” Carmen Balber, executive director of Consumer Watchdog, said in a press release discussing the coalition’s petition.
Increasing Pressure on Insurers
The renewed push for insurers to disclose all dealings with fossil fuel companies comes three years after former California Insurance Commissioner Dave Jones established the Climate Risk Carbon Initiative calling on insurance companies to divest voluntarily from investments in thermal coal (coal used to power electricity-producing turbines) and requiring insurers with more than $100 million (about half of the insurers in the state) to publish their fossil fuel investments.
In 2018, San Francisco became the first city in the United States to pass legislation urging insurers to divest from fossil fuels.
Seventeen large insurers in Europe have divested about $30 billion from coal companies since 2015, and six—Allianz, AXA, Munich Re, SCOR, Swiss Re, and Zurich—have stopped or limited their insuring of the coal industry.
Mapfre, the third largest insurance group in Latin America, announced on March 8 it will stop underwriting new coal projects and will divest from companies deriving more than 30 percent of their revenue from coal.
‘An Attempt to Intimidate’
This proposal is about ending fossil fuel use, not fighting climate change, says Tim Benson, a policy analyst with The Heartland Institute, which publishes Environment & Climate News.
“Insurance companies and fossil fuel companies bear no more responsibility for climate change than does any individual who uses them,” said Benson. “There is no true concern about climate change behind this petition. Rather, it’s about radical environmentalists, who hate fossil fuel use, seeking to destroy the companies that produce them, by any means necessary.”
Consumers will suffer if California’s Department of Insurance requires insurers to disclose their coal, natural gas, and oil investments, says Wayne Winegarden, Ph.D., a senior fellow at the Pacific Research Institute.
“This proposal is an attempt to intimidate insurance companies, cloaked in the virtue of transparency,” said Winegarden. “These environmental groups are hoping to punish companies, but if their antics are successful it will be consumers, particularly low-income consumers, who will suffer from higher energy costs.”
Arianna Wilkerson ([email protected]) is a state government relations manager at The Heartland Institute.