Insurers called out for ‘greenwashing profits’ from fossil fuel underwriting

Insurers are prioritising profits over the planet by continuing to underwrite projects for fossil fuel companies, according to campaign group Insure Our Future. Naming the world’s most active insurers of the fossil fuel sector, Insure Our Future called out insurers for retreating from property risks exposed to climate change threats while simultaneously insuring producers of fossil fuels.

Insure Our Future says the Lloyd’s market houses “the world’s biggest fossil fuel underwriters”, collectively booking annual premiums of an estimated $1.6bn to $2.2bn. But listed by individual insurer, the top ten ranking places Bermuda’s Aegis as the leading fossil fuel insurer based on premium written estimates for 2022, followed by China’s PICC, Russia’s Sogaz, Chubb, Allianz, AXA, Fairfax Financial, Zurich, W R Berkley and AIG.

Insurance cover for fossil fuel companies earned insurers an estimated $21bn in 2022, according to research conducted by Insuramore for Insure Our Future.

Publishing its 2023 Scorecard on Insurance, Fossil Fuels and the Climate Emergency, which scores and ranks the climate policies of 30 major insurers, Insure Our Future says it has intentionally left the top three places in the ranking table empty to symbolise insurers’ failure to respond to the climate emergency.

Allianz ranked as the best insurer for its policies on fossil fuel insurance, and overall, followed by Generali, Aviva and Swiss Re. Allianz also topped the ranking for its coal insurance policies, awarded the highest score, followed by AXA, Swiss Re and Generali. Aviva and Generali were named as holding the best policies for oil and gas insurance and, together with German insurers Allianz, Hannover Re, Talanx and Munich Re, have ceased to insure new oil and gas production.

“None of the 30 insurers have ended cover for new gas power plants, and almost none have ended support for a wave of new liquefied fossil gas terminals,” the report says.

The industry’s policies restricting coal underwriting have been the most effective, the report finds. Insuramore calculates insurers with a 41.2% market share of the commercial property/casualty market and a 62.7% share of the reinsurance market have taken action. But Insure Our Future says far fewer insurers, at 19.6% of the commercial p/c market and 46.7% of the reinsurance market, have introduced policies on oil and gas, with restrictions more limited than for coal.

“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 says.

Insure Our Future says the insurance market first warned about the growing risks of climate change 50 years ago, but continues to provide insurance to projects that jeopardise the 1.5°C pathway.

“Thousands of new fossil fuel projects are in the pipeline, and the scorecard warns that if they are insured and built, they will lock in increased consumption for decades to come and will completely destroy our chances of limiting global warming to 1.5°C,” Insure Our Future said.

Instead, insurers and their reinsurers are backing away from property risks that are exposed to losses from climate change-driven weather events, the campaigner said. It also criticised leading insurers for “dropping” climate change commitments made when they joined the Net-Zero Insurance Alliance, with 20 of the 31 members exiting the alliance earlier this year in the face of anti-trust legal action in the US.

“Only a handful have published transition plans and net-zero targets, and none have adopted targets to reduce their absolute insured emissions by 34%,” Insure Our Future says. Companies have “greenwashed their ongoing fossil fuel profits but have not produced any tangible results”, the Scorecard alleges.

Ariel Le Bourdonnec, from the campaign group Reclaim Finance, adds: “Insurers talk a lot about their climate commitments and supporting their clients through the energy transition, but this is plain greenwashing. They are still profiting from providing cover that allows companies to develop new fossil fuel projects. Insurers could be a force for change, but instead they are undermining climate action.”