This is according to the seventh annual scorecard on insurers’ climate policies published by the Insure Our Future campaign.
In 2022, the fossil fuel insurance sector raked in $21.25bn, the scorecard reveals. The report notes that the insurers in the Lloyd’s of London market collectively represent the world’s largest fossil fuel underwriters, with an estimated $1.6-$2.2bn in annual premiums.
While insurers seem happy to keep backing new oil and gas, the scorecard sets out how many are now ceasing to provide coverage for buildings and assets in the areas most impacted by extreme weather.
The report reveals that insurance payouts for natural catastrophes have surged to an average of $110bn per year since 2017, more than double the previous five-year average.
Insure Our Future campaign’s global coordinator Peter Bosshard said: “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.
According to data from the Global Energy Monitor, there are currently 655 coal power plants, 238 LNG import terminals, 980 gas power plants, 210,000 kilometres of gas pipelines, and 31,000 kilometres of oil pipelines proposed or under construction.
The consensus among climate scientists at the Intergovernmental Panel on Climate Change (IPCC) and experts at the International Energy Agency (IEA) is that increased oil and gas production is incompatible with the 1.5°C Paris climate target.
The insurance sector’s climate pledge decelerates
Despite these alarming numbers, leading insurers have abandoned climate change commitments they made as members of the Net-Zero Insurance Alliance, which was launched ahead of COP26 in Glasgow.
The Alliance’s members had initially pledged to reduce emissions from the companies they insure by 34% from 2019 to 2030 and committed to publishing a transition plan by June 2023 and net-zero targets by the end of July.
However, by the end of September 2023, 20 out of 31 members had left the alliance under the threat of anti-trust action in the US. Only a few have published transition plans and net-zero targets, and none have adopted targets to reduce their absolute insured emissions by 34%.
Moreover, while some insurers have introduced policies to limit their involvement with coal, restrictions on oil and gas remain limited. According to Insuramore, companies representing 19.6% of the commercial property and casualty market and 46.7% of the reinsurance market have taken action, showing slight improvements from previous years.
Science fiction author Kim Stanley Robinson writes in a foreword to the scorecard: “Everyone knows we have to act, but who goes first? Insurance goes first. That’s its business!
“It calculates risk and refuses to insure risks that are too dangerous to cover. That’s precisely the calculation it is designed to make. So now it needs to stop insuring the fossil fuel industry.”
On the eve of the COP28 climate summit, insurance company CEOs will gather in Zurich to celebrate the 50th anniversary of the Geneva Association, the industry’s think tank, and to discuss the role of insurers in accelerating the world’s decarbonisation.