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For Climate Justice, Insurers Must Stop Supporting the Fossil Fuel Industry

To live up to their public commitments to racial justice, fossil fuel insurers must cut ties with the polluters driving climate and environmental racism

By Abi Velasco and Hannah Saggau

Fossil fuel companies are responsible for nearly ninety percent of annual carbon dioxide emissions that drive the climate crisis. This same industry has known about the impacts of climate pollution for decades, manufacturing a calculated disinformation campaign to sow uncertainty around climate science in order to continue making profits. Now, fossil fuel companies and their financiers have largely pivoted to greenwashing, positioning themselves as environmentally friendly in marketing and public relations while continuing to contribute to climate change and delaying climate action.

If the world’s temperature continues to rise, cataclysmic weather events will only get worse, costing the U.S. more money and lives lost. While the climate crisis will affect us all, Black, Brown, and Indigenous people will feel the harshest and deepest consequences of the world’s dependence on coal, oil and gas. Countless studies show the harms of climate and environmental racism across the globe as communities face the realities of a warming planet. This is particularly true in countries in the Global South, which contribute the least to rising temperatures yet are most vulnerable to climate disasters. The Global North has produced 92% of global greenhouse emissions in excess of safe levels of carbon, with the U.S. contributing 40% of excess global emissions.

In the absence of strong climate action from world governments, a growing movement is pressuring financial institutions–including insurance companies–to accelerate the energy transition. The same way you can’t buy a home or drive a car without insurance, the fossil fuel industry can’t operate, or expand, without insurance. The insurance industry’s ongoing support of the polluters driving the climate crisis makes them complicit in climate harms to communities of color. To support racial justice through their actions, not just their words, insurance companies like AIG, Liberty Mutual, and Chubb must end their support for fossil fuel expansion.

Fossil Fuel Projects are Toxic to the Health and Wealth of Communities of Color

The fossil fuel industry continues to build its polluting empire in predominantly Black neighborhoods. It is no accident that fenceline communities—where residents live close to toxic waste facilities, oil refineries, petrochemical plants, and other hazardous facilities—are disproportionately Black. Companies typically wield more influence over local governments in these communities, which they use to streamline building polluting infrastructure in Black neighborhoods. A 2017 report by the NAACP and the Clean Air Task Force found that Black people are 75% more likely to live in fenceline communities than white people. 

Living in close proximity to fossil fuel infrastructure is also devastating to Black people’s health. Cancer is widespread throughout Black populations living in fenceline communities. In Louisiana, the problem has become so severe that an 85-mile stretch of land along the Mississippi River is nicknamed Cancer Alley. A hospital worker in the area stated that “out of every 10 houses, there’s a prospect of one or two people [in those homes] that have died of cancer.” According to the Clean Air Task Force, over one million Black people in fenceline communities face a cancer risk above the Environmental Protection Agency’s level of concern.

Climate-driven severe weather also hits communities of color hardest. A 2009 study found that Black residents in Los Angeles are almost twice as likely to die from heat waves than other residents. After Hurricanes Katrina, Harvey, and Ida decimated predominantly Black communities, these communities had to navigate rebuilding their homes and restoring their neighborhoods while also navigating the uneven dispersal of aid. A 2018 study showed how average wealth changed in counties that had at least $10 billion in damages caused by natural disasters. Shockingly, it found that average wealth increased for white residents by almost $126,000, while average wealth for Black, Latinx, and Asian residents decreased by $27,000, $29,000, and $10,000, respectively. Insurance likely plays a role in this: white Americans are more likely to live in neighborhoods with higher property values and receive higher insurance payouts following disasters. Thus, disparities in post-disaster recovery contribute to a widening racial wealth gap—a problem that will only worsen if the fossil fuel industry is left unchecked.

A recent report by the National Oceanic and Atmospheric Administration found that the United States will have an unprecedented rise in sea level by 2050. This will especially impact coastal Indigenous communities who have already experienced changes due to the climate crisis. The Quinault Indian Nation has seen the population of sockeye salmon used for food and cultural traditions nearly disappear, related to climate impacts. In order to survive, they have no choice but to adapt to the climate crisis by relocating some of their villages away from their ancestral home, which could cost up to $100 million in addition to incalculable cultural and other harm.

Insurance Companies Must Stop Backing Fossil Fuels and Support Communities of Color Instead

Oil and gas companies have little incentive to address climate change when their profits continue to soar. On the other hand, the insurance industry—a key enabler of fossil fuel operations and expansion—is increasingly feeling the pressure of the climate crisis. As climate disasters escalate in frequency and severity, insurers are facing mounting losses and increasingly volatile risk. At the same time, insurers provide crucial underwriting and investments to fossil fuel companies, thus enabling the very climate impacts that are harming their business.

Insurance companies have the ability to accelerate the transition away from fossil fuels, not enable it. As many insurers retreat from the coal and tar sands sectors, it’s becoming harder and costlier for some fossil fuel companies to obtain necessary insurance. A growing number of insurance companies, including some of the world’s largest insurers and reinsurers, have recently adopted restrictions on insurance for new oil and gas projects.

Despite this, the U.S. insurance industry has so far failed to end support for fossil fuel expansion. Just 10 companies, including U.S. insurers American International Group (AIG), Chubb, and Liberty Mutual, account for 70% of oil and gas underwriting. AIG recently restricted insurance for tar sands oil and Arctic energy, but has not addressed its support for oil and gas companies more broadly, despite ranking among the top 3 oil and gas insurers globally.

In June 2020, during the racial injustice protests that followed the murders of George Floyd and Breonna Taylor at the hands of the police, corporations pledged to consumers and the wider public to do better on issues of racial justice and equity. Liberty Mutual, Chubb, and AIG are no different, branding themselves as corporations that fight against injustice. Chubb CEO Evan Greenberg wrote in an email to U.S employees, “we have an obligation to find our voice and raise it when we see social injustice.” AIG’s President Peter Zaffino and CEO Brian Duperreault promised AIG would be a leader in anti-discrimination work in order to “contribute to lasting change.” Liberty Mutual says it “works to serve as a force for social good by…supporting our most vulnerable neighbors, and considering the societal impacts of our business decisions.” 

During this time, Liberty Mutual and AIG both donated to multiple civil rights organizations. AIG donated $500,000 and Liberty Mutual donated $1 million–a pittance in relation to its profits. In 2021, Liberty Mutual reported a net income of over $3 billion, Chubb brought in over $8 billion, and AIG’s net income was more than $9 billion. Some of this money is made from investing in and insuring the fossil fuel industry which drives climate injustice.

Company statements in support of racial justice are empty words if these companies continue to insure oil and gas projects that breed environmental racism. Liberty Mutual, AIG, and Chubb’s commitments to internal diversity and equity mean little unless they also end the climate and environmental injustice and racism related to their business practices. These companies are still among the world’s top oil and gas insurers. They must back up their words with a pledge to stop insuring all fossil fuel expansion.

Join us in calling on AIG, Chubb, and Liberty Mutual to stop fueling climate injustice and end support for oil and gas expansion.