Insurance companies are a crucial pillar of the fossil fuel economy, providing essential insurance and investments in coal, oil, and gas.
By Hannah Saggau
In a 2021 filled with devastating climate disasters and horrifyingly slow climate action from world leaders, we need to pull every lever to avoid climate chaos. Every corner of the world experienced major impacts from climate change this year. The Pacific Northwest shattered temperature records when a slow moving-heat dome likely killed more than 1,000 people. Flooding shut down the New York Subway system, forcing commuters to wade through underground lakes on their commute. And just this past month, a flurry of tornados wreaked havoc across four states, flattening communities as they slept.
As the world faces escalating climate disasters, our leaders have altogether failed to meet the moment. Even if countries meet their climate pledges, global temperature could still rise 3.8°C. At this year’s UN Climate Summit in Glasgow, COP26, leaders agreed to return to next year’s conference with stronger targets for emissions cuts by 2030—delaying yet again strong climate action. Here in the United States, Senator Joe Manchin (D-W.V.) may have single handedly tanked the entire Build Back Better Act, including the bill’s historic climate investments.
While insurance companies might not appear to be a part of the problem, they play a little-known, but important role in driving climate chaos. Just ten companies, including American International Group (AIG) and Travelers, provide insurance coverage to 70% of the oil and gas industry. What’s more, U.S. insurers have $582 billion invested in fossil fuels, and nearly $90 billion in coal alone.
Insurance companies are a crucial pillar of the fossil fuel economy, providing essential insurance and investments in coal, oil, and gas. Major global insurers enable the construction of new coal plants and provide the coverage needed for risky oil pipelines to unleash more climate pollution. Without insurance, fossil fuel companies wouldn’t be able to maintain existing production or get financing for new projects.
That’s why Public Citizen launched a campaign against AIG this year. Yes, the same AIG that made risky bets on subprime mortgages and that taxpayers bailed out in 2008. Now, the multinational insurer is at it again—gambling with our futures on risky fossil fuel bets by insuring and investing in coal, oil, and gas. AIG is the largest coal insurer outside of China and a top 3 oil and gas insurer.
So, just in time for the holidays, we partnered with New York City activists to deliver AIG’s CEO a special holiday present: over 27,000 petitions demanding the insurer stop insuring fossil fuels. We called out CEO Peter Zaffino as a Grinch who is giving the world coal for Christmas instead of insuring our future.
Insurers like AIG are also massive investors in fossil fuels—AIG has $4 billion invested in coal alone as of this year. Where does the money for these investments come from? Their customers’ premiums. In other words, AIG and other insurance giants provide coverage for homes, businesses, and other property that are at risk from the climate crisis, then invest a massive amount of the premiums in… exacerbating the climate crisis. They do this even though intensifying climate harms are costing them billions in annual payouts.
If it seems impossible for AIG to play both sides for too long—simultaneously driving the climate crisis by supporting fossil fuels and losing money to climate-driven disasters—that’s because it is. But AIG has a plan: raise premiums and drop customers as climate harms escalate so it can stay profitable. What’s missing from its plan? Ending its fossil fuel coverage and investments.
Thirty-five of AIG’s global peers have already pulled back from covering coal, but AIG has refused to budge. A major investor, Legal & General Investment Management, even dropped its shares in AIG this past June over the company’s continued coal coverage.
And the insurance sector’s overall retreat from coal has already had tangible impacts on this polluting industry. Coal companies face rate increases up to 40% as the number of insurers offering coverage dwindles. And some controversial projects, such as the Adani Carmichael coal mine in Australia, have struggled to obtain adequate insurance. The oil and gas industry could see this, too: the Trans Mountain tar sands pipeline in Canada said activist pressure on its insurers made it harder and more costly to secure insurance.
It’s clear that insurance is a critical lever in the fight to slow the climate crisis. So in the new year, we’re ramping up the pressure on AIG to insure our future, not fossil fuels. Join us.