For decades, home and business owners have turned to insurance companies as a financial safety net to protect their homes, buildings, cars, and other high value items. Insurance companies have provided solace, generation to generation, to those who have invested a great deal of their livelihoods in infrastructure equity. When disasters like floods or fires came, insurance companies were friends that helped through crises.
Not anymore.
This year, insurance companies have retreated from many regions that were hard hit by catastrophic weather events. As the losses from these disasters skyrocketed, insurance companies vanished from the regions and policy holders that provided them with vast profits. In doing so, the insurers left 60 million US owners with few options to comprehensively and affordably protect their major life investments.
The Rainforest Network is calling foul. They say that insurance companies are:
- abandoning the communities that need help the most
- backing the climate crisis by actively propping up the fossil fuel industry
- fueling climate chaos
Identifying insurance giants like Liberty Mutual, AIG, and Chubb, the Rainforest Network argues that “the insurance industry literally has the power to change the world by withholding insurance from any new fossil fuel projects.”
Let’s unpack their analysis and see if it holds up to scrutiny.
The insurance industry’s net income was $19.8 billion in Q4 2021. A year later, it fell to $10.3 billion, and the annualized rate of return on average surplus fell to 4.4% from 7.9% a year prior. Net income fell to $41.2 billion in 2022, compared to $62.1 billion a year earlier, which amounted to a 33.6% decline.
Contrast those still-robust bottom line numbers with homeowners who have been slammed this year with astronomical increases in premiums.
A June US federal report released by the Treasury Department’s Federal Insurance Office offers 20 recommendations for state insurance regulators. It also acknowledges that the Biden administration has limited authority to compel these changes. One suggestion is what’s called “managed retreat.” Essentially, it’s persuading people to leave a place they call home. Oftentimes, the place has become too difficult or expensive to live in because of rising seas, stronger storms, or other impacts of a warming world.
It also continues a common practice of placing blame on the victim, in this case, the owners who are left with the consequences of catastrophic weather events.
Isn’t it time, instead, to look to the source of the climate crisis and their supporters and hold these individuals accountable?
Florida As Case Study For Insurance Company Duplicity
Let’s look at Florida. In Florida the average homeowners insurance premium is now $6,000 — up 200% from 2019, according to data from the Insurance Information Institute. Some high rise condominium associations have had to implement $30,000 special assessments to meet required million dollar insurance coverage.
Citizens Property Insurance Corporation, which is Florida’s state-sponsored plan, is the biggest and fastest-growing insurer in the state. Funded by customer premiums, the company now has some 1.4 million policies and covers about one out of every 8 Florida households. That’s nearly a 1 million policy increase since 2019.
In June, Citizens requested recommended rates that call for a statewide average increase of 13.1% for all personal lines multiperil policies – homeowners, condominium units, dwelling, and renters. Problems cited include rising construction and repair costs as well as contractor malfeasance.
Not every insurance issue is cut-and-dry, though. Amy Bach, executive director at the consumer advocacy group United Policyholders, told NBC News that a new law designed to fix the “Florida roofing scam” problem “eviscerated people’s ability to sue” their insurer.
Look At The Source — Insurance Companies & Their Business Practices
The Rainforest Network insists that, in order to stop the climate crisis, we need to get fossil fuels out of every industry, and that includes Big Insurance. Here’s the logical formulation of their argument.
- We count on insurance companies to protect us from catastrophic damages – like the fires, flooding, and storm damage caused by the climate crisis.
- Insurance companies’ entire purpose is to mitigate risk.
- The climate crisis is the biggest risk of all.
- Fossil fuel companies are the biggest contributors to the climate crisis.
- Yet insurance companies continue to back dirty, destructive fossil fuel projects for a profit.
- Fossil fuel companies need money, permits, and insurance to fund a new project.
- Insurance companies route consumer premiums into an estimated $450 billion worth of investments in coal, oil, and gas companies.
- Without insurance, new fossil fuel projects wouldn’t be possible.
- Due to fossil fuel investments and insurance, insurance companies are actually contributing a huge part to the climate crisis.
Meanwhile, investors are increasingly demanding that companies disclose climate risks, and many are doing just that. In fact, more than half of S&P 500 companies already disclose climate risks in their annual reports, according to a January 2022 study by the Conference Board.
“Republicans spend all this time saying they’re for the free market, but it’s the market that’s demanding this information,” David Shadburn, senior government affairs advocate at the League of Conservation Voters, told The Climate 202.
“The reason we’re even having these conversations is because investors — and in this case the federal government on behalf of our taxpayer dollars — want to know what these climate risks are,” he said.
The Rainforest Network needs you to help diffuse the power of insurance companies. They’re zooming in on Liberty Mutual, which, in the midst of the climate emergency, is insuring new tar sands pipelines, coal mines, and oil rigs; expanding fossil fuel extraction; and, trampling on Indigenous rights. Without insurance and with fewer investments, energy companies would find it increasingly difficult to build or operate polluting fossil fuel projects like pipelines, coal-fired power plants, or fracking wells. “Insurers can single handedly stop the expansion and operation of most fossil fuel projects,” the Rainforest Network states, “just by refusing to insure them.”
Can Liberty change its business practices? Can it be a leader in the fight for a world in which the climate is safe and stable and human rights are respected?
If you think it is possible, then you might want to join the global movement to move the insurance industry away from deadly fossil fuels to a healthy, clean energy future. The Rainforest Network is demanding that Liberty Mutual and the nation’s top insurance companies adopt policies that meet the scale and urgency of the climate crisis. To do so, insurance companies would:
- stop insuring new fossil fuel projects immediately
- phase out all fossil fuel investing and insurance in line with 1.5º C
- respect human rights, especially Indigenous rights
If you want to join in the fight, click here. Whether you do so or not, it’s clear that we need to hold fossil fuel companies and their subsidiaries accountable, and that means making transparent the ongoing profitability that emerges from perpetuating the burning of carbon.
This week, the world broke the daily temperature record.
This is yet another demonstration that climate change is out of control and one reason more for increased #ClimateAction ambition and justice. pic.twitter.com/YLlolsZMEy
— António Guterres (@antonioguterres) July 7, 2023
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