Climate change impacts Americans both directly and indirectly. Over the past year, homeowners and businesses have felt the effects of climate change on their wallets when they open up their insurance bills. The nation’s (and planet’s) growing exposure to catastrophic, climate-driven risks is leading to rising homeowners insurance premiums, reduced availability of insurance in many areas, and the hollowing out of insurance policies.
But it’s not just the reduced availability of affordable and useful coverage that should make consumers angry. A recent joint report by Public Citizen and Insure Our Future shows that some insurance companies are actually contributing to and profiting from the climate change that is leading the companies to charge higher premiums to consumers.
How are insurers doing this? By investing in and providing insurance coverage to coal mining projects that contribute to greenhouse gas emissions and increase global temperatures. Several global insurance companies fund and underwrite much of coal mining and other coal projects in the United States.
The joint report found that five insurance companies—AIG, Liberty Mutual, Lloyd’s of London, Swiss Re, and Zurich—are among the top insurers of U.S. coal mining. The five insurers covered at least 41% of U.S. coal production in 2022, basically ensuring that the coal industry could keep running. AIG was the largest funder, insuring almost 30% of all U.S. coal production.
Even as AIG, Liberty Mutual, and Berkshire Hathaway continue to insure coal mines, these three companies are also starting to limit or reduce coverage for U.S. homeowners. In other words, through their investments and insurance underwriting, insurers encourage, enable, and profit from the climate crisis. They then foist the cost and increased risks of climate change onto the American consumers who live in places threatened by its effects.
In recent years some insurance companies have responded to pressure from consumer advocates and environmental organizations by ending or restricting their coverage for coal mining and coal projects. Without insurance, many coal mining and coal-powered projects would never get off the ground. But other insurance companies continue to support coal, including these bad actors analyzed in this report.
To make matters worse, these five insurance companies are saying one thing and doing another; they are violating their own public policies by continuing to insure coal. The report analyzed records from the insurance companies and found numerous examples of this behavior. AIG, for example, publicly claimed that it would no longer invest in or provide insurance for coal-fired power plants or underwrite insurance risks for clients who get over 30% of their energy production or revenue from coal. However, AIG did not actually follow through on these promises.
Other companies practiced similar deceptions. Swiss Re’s policy stated that it was implementing a total phaseout of insuring coal and that, in the meantime, it would not insure companies with more than 30% of their exposure from coal. But Swiss Re currently underwrites Buckskin Mining Company, which gets at least 90% of its revenue from coal. The company Zurich also took advantage of a loophole in its promises to insure coal mines. Lloyd’s of London made a toothless pledge to achieve net zero emissions from underwriting by 2050 but did not change its behavior at all. And Liberty Mutual pledged not to underwrite companies with over 25% of their exposure coming from coal. But the report found that Liberty Mutual is violating its own pledge by underwriting coal mines and a company that gets 90% of its revenue from the coal business.
The report concludes by calling on these insurers to stop insuring new coal mines and coal projects, stop insuring any new clients from the coal sector, and stop offering insurance services that expand coal production. Insurance companies should also phase out or divest insurance services or assets from coal companies that are not committed to reducing carbon emissions.
Insurance companies have a critical role to play in reducing greenhouse gas emissions and keeping insurance affordable in the face of rising climate change. It is past time for them to become part of the solution and not the problem; insurers should stop insuring coal mines and projects that fuel climate change. Consumers’ insurance premiums, the availability of insurance, and their ability to afford their homes and businesses all depend on it.