Recently introduced federal legislation that would require insurance companies with more than $100 million in annual premiums to disclose investments and underwritings related to coal, oil and gas projects, and fossil fuels is already required at the state level and would increase costs for consumers, said industry trade associations.
“State regulators have been examining the impact of climate change on insurers and the insurance marketplace for years, and disclosure has long been a part of that,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC). “Federal calls for insurers to publicly disclose investments is a red herring designed to score political points and does nothing to help consumers.”
Moreover, said Nat Wienecke, the American Property Casualty Insurer Association’s (APCIA) senior vice president of federal government relations: “Insurers play an important role in helping protect families, businesses, and communities as our economy transitions to a greener energy future. The call for an immediate end to insurance services for certain fossil fuel activities and producers ignores the importance of providing an effective energy transition to renewable sources.”
On July 25, Rep. Adam Schiff (D-Calif.) and Rep. Rashida Tlaib (D-Mich.) introduced the Polluter Portfolio Disclosure Act. The U.S. representatives said the legislation would “shed light on how big insurance companies are profiting from the climate crisis and, at the same time, failing to provide the necessary coverage to communities in need.” The bill calls for annual disclosures of climate-related investments to the Federal Insurance Office, the Financial Stability Oversight Council, and the Office of Financial Research — and for the information to be made public and searchable online.
NAMIC said the measure scapegoats the insurance industry, which is greatly affected by and is sympathetic to the victims of the increasing natural disasters.
“America’s insurers pay billions of dollars every year to help their policyholders recover from extreme weather, and they will be there for policyholders when the next disaster strikes,” Grande said. “We also continue to press Congress to fund more mitigation projects to reduce risk and better protect America’s communities from future extreme weather events. Climate change is a problem that affects everyone; needless legislation and political grandstanding aren’t part of the solution.”
“Insurers play an active role in facilitating a more resilient economy through their investment strategies and by closely partnering with policyholders and creating products that support their own transition pathways,” added Wienecke.
“‘Hard exits’ prevent insurers from contributing what they do best — helping consumers and businesses understand physical and transition risk and operationalize their plans.
Hard exits may also contribute to negative, global economic impacts, as we remain in a period where traditional fossil fuels are still very much in need and a hard exit would disproportionately impact marginalized communities and developing economies.”
Public Citizen, one of a group of organizations endorsing the bill, said reducing climate risks “requires reducing the insurance industry’s financing and insurance of the fossil fuel industry.”
“While insurance companies flee states that face the most harm from the climate crisis, they continue to hold tight to their investments in fossil fuels,” said Carly Fabian, climate insurance advocate with Public Citizen. “The combination of a planet on fire and an insurance industry underwriting and investing in the accelerant is not sustainable.”
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