Insurers operating in the Lloyd’s of London market are the world’s biggest underwriters of fossil fuel projects, research has found.
Fifty years after the insurance industry first warned about the impact of the climate crisis, it is continuing to contribute to the climate emergency, the Insure Our Future campaign, a global group of 24 NGOs, said in its annual “scorecard” on 30 major insurers and their involvement in fossil fuels.
Insuring coal, oil or gas projects earned the industry about $21.25bn last year, according to research commissioned for the report from Insuramore, a market intelligence firm. Insurers on the Lloyd’s market are collectively the world’s biggest fossil fuel underwriters, with an estimated $1.6bn to $2.2bn in annual premiums, it found. Among the biggest Lloyd’s names are Hiscox and Beazley.
The Top 10 individual insurers of fossil fuel projects are the Lloyd’s insurer Aegis, the People’s Insurance Company of China, Russia’s Sogaz, Germany’s Allianz, France’s Axa, Canada’s Fairfax Financial, Switzerland’s Zurich and the US insurers Chubb, W.R. Berkley and AIG.
With floods, hurricanes, wildfires and droughts increasing in frequency and severity, insurance payouts for natural catastrophes have jumped to an average $110bn a year since 2017, more than twice the average over the previous five years, according to industry figures from Swiss Re.
Despite this, Insure Our Future said most insurers continued to support projects to boost oil and gas production, even though they were incompatible with the 1.5C Paris climate target.
Peter Bosshard, global coordinator of the campaign, said: “Most insurance companies continue to ensure new oil and gas projects – pipelines, [liquefied natural gas] terminals and gas-fired power plants – which will lock in demand for decades to come – at a time when the climate crisis is escalating and when insurance companies are withdrawing from many regions because they consider the climate risks too high.”
Some companies have stopped insuring homes in California, Florida and Louisiana, and in parts of Australia, leaving homeowners highly vulnerable and with significantly reduced property values.
The report found that restrictions on oil and gas are far weaker than on coal. New coal power projects are becoming “effectively uninsurable” outside China because so many insurers have ruled out support.
The UK’s Aviva and Italy’s General have put the strongest limits on oil and gas insurance, and along with the German insurers Allianz, Hannover Re, Talanx and Munich Re, have ceased insuring new oil and gas extraction without major exceptions.
However, none of the 30 insurers ranked in the report have ended cover for new gas power plants, and almost none have ended support for a wave of new LNG terminals.
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Bosshard said progress had been slow and “when it comes to climate action, winning slowly is the same as losing”.
Most of the insurers in the UN-convened Net Zero Alliance, launched in the run-up to the Cop26 climate summit in Glasgow, have left the alliance (20 of 31 members), including Munich Re, Zurich, Axa, Allianz and Hannover Re because of the threat of anti-trust action in the US. Only a handful have published transition plans and net zero targets.
Bosshard sets his hopes on young people. Earlier this year, more than 500 students and recent graduates of top UK universities pledged a “career boycott” of major insurers, saying they would not work for firms, including Lloyd’s, that supported controversial fossil fuel projects.
