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Insurance industry continues to play a major role in fuelling climate change

The 15 largest European insurance and reinsurance firms are contributing to climate change by investing over $130bn (£101bn) in fossil fuel companies, according to a report from Profundo.

27 APRIL 2017 | CHRIS SEEKINGS
Insurance companies are "laggards on climate action" ©Shutterstock
Insurance companies are "laggards on climate action" ©Shutterstock

It reveals that only two of these use their power as major shareholders to influence levels of greenhouse gas emissions, and 11 continue to be highly involved in underwriting fossil fuel projects.

These findings complement research by Ceres, which found that 40 leading US insurers have invested at least $459bn in the fossil fuel sector, which combined with the European investment, is greater than the entire GDP of Sweden.

"Insurance companies are on the world stage talking about the need to address climate change, while behind the scenes they are underwriting new fossil projects that would make the goals of the Paris climate agreement impossible to reach", Sunrise Project executive director John Hepburn, said.

"Insurance companies are supposed to help manage risk and protect the community, but by being such laggards on climate action, they're contributing to the kind of catastrophic impacts from which they are supposed to protect us."

Of the European companies studied, German company Allianz is by far the biggest investor in fossil fuels, investing $59bn, followed by French firm AXA and the UK’s Aviva, which have invested $34.3bn and $14bn respectively.

By doing this, these companies are going against their self-interests, according to the report, with the risk of increased insurance claims as a result of extreme weather, and reputational damage, both greater because of their behaviour.

In addition, the risk of stranded assets is increased by continual investment in fossil fuels, while insurance groups could face claims on third-party liability insurance if their clients have failed to mitigate damage to the climate.

“The insurance industry was an early leader on climate change because they understand the risks better than any other businesses,” Greenpeace Switzerland finance campaigner, Katya Nikitenko, said. “It is outrageous that after more than 20 years, major insurance companies are still fuelling climate change.”

Climate Analytics and other experts found that no more new coal projects can be built if humankind is to achieve the goals of the Paris agreement, however there are 1,600 planned – none of which can go ahead without insurance.

"Insurance companies can only regain their climate credibility if they come clean on coal,” director of the German advocacy organisation, Urgewald, said. “They need to stop underwriting and divest from coal projects now."

AXA announced yesterday that it will no longer underwrite coal companies; the first major insurer to make the commitment.


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