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    How the sleepy world of insurance found itself at the forefront of the battle for net zero

    Anti-Extinction Rebellion protesters target Lloyd's for insuring new oil and gas projects. Photo: Richard Baker/In Pictures via Getty Images/Richard Baker

    U.S. Republicans are about to fight what they call the “radical environmental agenda” promoted by the insurance industry, blaming it for raising insurance premiums and fuel prices for millions of Americans .

    At the same time, climate campaigners are putting pressure on the same companies, claiming that their environmental policies are too weak.

    This dilemma highlights how insurers have proven to be an unlikely target in the battle for zero net income.

    This furor has left a normally drowsy and solid industry struggling to respond. Attention is not what most insurance companies are used to.

    Many are choosing to hide in their shells: this week, a number of insurance giants withdrew from the Net-Zero Insurance Alliance (NZIA), a United Nations group formed by former Governor of the Bank of England Mark Carney.

    This comes after US Republicans attacked the industry for promoting environmental, social and governance (ESG) issues.

    More than 20 Attorneys General said requiring NZIA members to stop providing fossil fuel coverage could violate laws about competition. They argued that the plan also led to higher fuel prices for ordinary Americans.

    “The ESG movement has spread to every corner of the financial and energy sectors of the world, and unsuspecting Americans are paying the price,” Sean said. D. Reyes, Attorney General of Utah.

    “Insurers have an obligation to protect the interests of their customers, not to promote a radical environmental program.”

    Companies that have withdrawn from the NZIA include AXA, Allianz , SCOR, Swiss Re, Munich Re, Zurich Insurance and Hannover Re. Many insurers who have left have said they will still stick to their own climate targets no matter what.

    The Glasgow Financial Alliance for Net Zero, an umbrella organization over the NZIA, said “political attacks” are blocking climate risk that will hurt policyholders, mainstream investors and the local economy.”

    The Net-Zero insurance alliance was created by former Bank of England Governor Mark Carney. Photo: FABRICE COFFRINI/AFP via Getty Images

    The UN said this week that it supports the goals and policies of the NZIA. The group still has 23 members, including Aviva, Lloyd's of London and Tokio Marine Holdings.

    While Republicans welcomed the departure, activists on the other end of the political spectrum denounced the exodus as cowardice.

    Patrick McCulley, senior analyst at pressure group Reclaim Finance, said: “Real climate leaders need to fight climate denial, not give in to it.”

    This shock reflects a split within itself insurance industry on how to respond to climate change.

    Insurance companies were among the first to become interested in the science of human-caused global warming and quickly realized how it could affect their business.

    Climate disasters such as floods and wildfires lead to an increase in insurance claims, so it was in their interest to look into this matter.

    Annual insured losses from natural disasters have averaged over $110 billion over the past five years. more than double the average of $52 billion over the previous five-year period.

    Insurers paid out $125 billion in disaster coverage in 2022 out of the total Swiss Republic

    However, Swiss Re believes the main reasons for the increase in applications are economic: more people are moving to disaster-prone areas like Florida in search of sun and work, and rising building material prices are driving up the cost of post-disaster repairs.< /p>

    However, the company has warned that climate change will only exacerbate the situation in the coming years, making natural disasters more frequent.

    Many insurers have responded by directing more of their investment towards green infrastructure. and avoid coal mining companies, the fuel responsible for most of the world's carbon emissions.

    Protesters ahead of Lloyd of London's AGM called on one of its syndicates to stop sponsoring coal projects. Photo: Belinda Jiao

    Furthermore, NZIA members have agreed to achieve zero greenhouse gas emissions in their insurance portfolio by 2050 in accordance with the Paris Climate Accords.

    Differences remain in how far individual companies are ready go, however.

    While some firms, including Swiss Re, one of the world's largest reinsurers, have suspended new oil and gas project insurance, others, such as Lloyd's London market syndicates, continue to offer it.

    At the same time, no one likes the industry.

    While Republicans scold them for raising premiums and even the cost of gasoline, climate change protesters scold the industry for not doing enough.

    Demonstrators outside the annual general meeting of Lloyd's of London last Thursday waved placards stating that the market is “insuring the climate crisis”.

    Lindsay Keegan of the Insure Our Future campaign group points to the forecasts of the International energy agency, which show net profit. the zero targets will not be met even if only the currently discovered fossil fuel resources are fully utilized.

    Campaigners like Keegan are targeting insurers because they believe they have a unique opportunity to do something. While BP or Shell may simply ignore their demands, it is virtually impossible for the oil giants to develop new drilling sites if they cannot obtain insurance.

    “The global insurance market does not need fossil fuel companies. , quite the contrary,” he adds.

    Some graduates from leading universities have now threatened a massive boycott of the insurance industry for their climate policies.

    A letter from more than 500 current students studying at University College London, Oxford University, Cambridge University, Edinburgh University and other universities warns that they will not “place our professional careers at the service of climate disruptors who insure those Who is responsible for the climate crisis?

    2105 Zero Path Power Generation

    The letter was prepared by Sasha Ruello-Jossick, a political science student at the University of California London. Would she and her friends really turn down a high-paying job at an insurance company on principle?

    “It's not just about the pay,” she says. “We deserve better than a job that will ruin our future.

    “These companies can change if they want my generation to come and work for them.”

    Keegan says the insurers' ability to influence big issues was highlighted in the months after the war in Ukraine first erupted when Lloyd's ships carrying Russian oil lost their insurance coverage, hitting the Kremlin's exports.

    On the contrary, the industry continues to reinsure fossil fuel projects despite a less visible threat from the global economy. warming.

    Activists point to the undeveloped Rosebank oil field in the North Sea, which is currently being explored by Norwegian state giant Equinor. Some insurers have refused to rule out coverage for the project.

    Lloyd's agents are not ruling out supporting the East Africa Oil Pipeline, a project by French energy company TotalEnergies that will run through Uganda and Tanzania.


    Insurers say they are already taking significant action to combat climate change, putting pressure on companies they invest in to reduce their carbon footprint and requiring those who want to insure to plan for a green transition.“This is an opportunity for people to make a real positive impact in their careers,” says a spokesperson for the Association of British Insurers.

    “There's always more to be done…But ultimately governments must determine how they generate energy. for its citizens.

    “While some insurers refuse to cover certain projects, such decisions are always made only after careful consideration, as they may have indirect consequences for the protection of workers and those who live near such facilities.”

    Between meanwhile, a changing climate is also destroying the foundations of insurance.

    Should pure zero be abandoned? Poll

    Eric Andersen, president of London-based reinsurance company Aon, told a Senate committee in March that climate change had created a “crisis of confidence in loss forecasting.”

    Kegan claims the insurance industry has not taken the lead own warnings.

    “Their own models – and insurance in general – are based on historical weather data and no longer work,” he says.


    There are consequences for insurance not meeting claims. When insurers make a mistake in their amounts and are forced to pay more than they bargained for, they tend to take less risk or charge premiums to cover losses.

    There are a growing number of insurance companies in Florida. simply withdrawn from the state entirely due to skyrocketing demands following storms like Hurricane Yang and other extreme weather events.

    This highlights catastrophic climate change – global warming of two degrees Celsius or more at pre-industrial levels. — threatens the business model of the industry itself.

    Meanwhile, however, insurers are getting it from both casks, climate campaigners and Republican critics alike.

    For a profession unfamiliar to the the focus, the attention was uncomfortable. Unfortunately, they may have to get used to it.

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