The Insure Our Future campaign has delivered a scathing assessment of the insurance sector alongside the release of its seventh annual scorecard.
The campaign argues, despite early industry admissions of the dangers posed by climate change, numerous insurers continue to underwrite and invest in the growth of fossil fuels, thereby undermining the objectives of the 1.5°C target set by the Paris Agreement.
According to the report, natural catastrophes have led to insurance claims of an average of US$110bn per year since 2017 — a two-fold increase from the previous five-year period.
The report, referencing research from Insuramore, added that the insurance industry collected approximately US$21.25bn in fossil fuel premiums in 2022.
It specifically pointed the finger at insurers on the Lloyd’s market, saying they collectively are the biggest fossil fuel underwriters — with estimated annual premiums of between US$1.6bn and US$2.2bn.
‘A grim reality’
Peter Bosshard, Global Coordinator of the Insure Our Future campaign, said that although the industry first warned about climate risks in 1973, referencing Munich Re’s climate risk statement that year, the warnings have become a grim reality — particularly for low-income countries and communities which have contributed least to the climate emergency.
He said some insurers are “abandoning customers affected by climate risks” but that the industry “continues to fuel the climate crisis by underwriting and investing in the expansion of fossil fuels.”
He added, “If insurance companies took climate science seriously, they would end all support for increased fossil fuel production.”
The report also pointed to a tightening of reinsurance capacity in the industry, saying there was 20-25% decrease in 2022, which has led to a spike in premiums.
This contraction prompted some major firms to downscale or wholly exit property insurance markets, leaving homeowners facing heightened vulnerability and depreciating property values.
The report also accused former Net Zero Insurance Alliance members of not upholding their promises, saying that, of the 21 of the 30 members who had left under threat of anti-trust action in the US, only a handful had “published transition plans and net zero targets and none have adopted targets to reduce their absolute insured emissions by 34%.”
Adding that some companies have “greenwashed their ongoing fossil fuel profits but have not produced any tangible results.”
The 2023 scorecard saw Allianz take the top spot with what Insure Our Future considered the most comprehensive policies. They were trailed by Generali and Aviva in second and third.
Swiss Re was the highest-ranked reinsurer, ranking fourth overall for the (re)insurance industry overall.
Looking at Asia Pacific, QBE ranked the highest for those headquartered in the region, finishing 13th on a global scale. The Japanese trio of Sompo, Tokio Marine, and MS&AD were close behind, in mid-table. While China’s PICC and Sinosure finish joint 25th, bottom of the table, with Ping An just a few places ahead in 22nd.
Taking into account coal-only rankings, Allianz again finished in first place – with the report giving the insurer a 10 out of 10 score. with AXA, Swiss Re, and Generali following.
In the oil and gas sector, Aviva and Generali emerge with the firmest restrictions in place. Despite this Insure Our Future said it had only awarded them a report score of 4.0 out of 10.
Insure Our Future critiqued the disparity between insurers’ stricter regulations on coal, compared to the less rigorous restrictions on oil and gas. It said that of the 30 insurance companies assessed, none has entirely ceased cover for new gas power plants or LNG terminals.
Pressure is increasing on the insurance industry to align with 1.5°C goals, with new regulatory demands both from the EU and the US urging transparent disclosure of climate-related risks and fossil fuel involvements.
Along with calling for calls for swift and decisive action from insurance companies, Insure Our Future is also advocating for the International Association of Insurance Supervisors to establish a regulatory framework for tying underwriting practices to climate science.
Kim Stanley Robinson, author of novels which examine the serious consequences of global warming, asserted the proactive role insurers ought to play: “Everyone knows we have to act, but who goes first? Insurance goes first. That’s its business! It calculates risk and refuses to insure risks that are too dangerous to cover.”
The debate on the industry’s role in addressing climate change is set to continue — with imminent industry discussions at the Geneva Association’s 50th-anniversary event and the COP28 climate summit on the horizon.