Insure Our Future has said that after 50 years of failure, the insurance industry must act to support the climate target, highlighting the fact insurers withdrew cover for climate risks while backing greater fossil fuel production.
The organisation states that most insurers have continued to support projects to increase oil and gas production, despite warnings from the world’s leading climate scientists this is incompatible with the 1.5°C Paris climate target.
Drawing on research by Insuramore, the report highlights that fossil fuel insurance earned the industry around $21.25 billion in 2022. Insurers at the Lloyd’s of London market collectively are the world’s biggest fossil fuel underwriters with an estimated $1.6-$2.2 billion in annual premiums, says Insure Our Future.
This is despite the fact that, on average, insured losses from natural catastrophes have soared to $110 billion a year since 2017, which is more than twice the average over the previous five years.
Peter Bosshard, Global Coordinator of the Insure Our Future campaign, commented, “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.
“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.”
Hilda Flavia Nakabuye, of Fridays For Future Uganda, added: “Insurance companies are in a powerful position to protect people and the planet. They need to truly protect communities impacted by the climate crisis, rather than supporting the fossil fuel industry and prioritising profit.”
Insure Our Future notes that despite Munich Re publishing the industry’s first warning about the risks of climate change in 1973, 50 years later, both fossil fuel consumption and CO2 emissions continue to rise.
Ariel Le Bourdonnec, Insurance Analyst at Reclaim Finance, said: “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.”
The comprehensive report examines restrictions on oil and gas in comparison to coal, and highlights the top fossil fuel insurers in 2022.
Ultimately, Insure Our Future warns that there’s growing pressure to align with the climate target, noting the fact re/insurers will need to produce transition plans with quantifiable targets and processing for reaching net zero by 2050, under Solvency II.
