Activist Group Scorecard: Insurers Adopting Policies on Oil and Gas Slowed in 2023

The number of insurers adopting policies on oil and gas has slowed, according to climate activist organization Insure Our Future’s seventh annual “Scorecard on Insurance, Fossil Fuels and the Climate Emergency” released this week.

The scorecard assesses the policies on insuring and investing in coal, oil and gas of 30 insurers and reinsurers. It highlights what the authors view as progress and loopholes, and it lists those insurers they believe are industry leaders on these policies and those they consider laggards.

After an uptick in insurers restricting investing in or coverage of oil and gas, five major insurers adopted oil and gas restrictions in 2021 followed by seven in 2022. However, only four companies adopted these policies in 2023, the report shows. The report also shows insurer restrictions on oil and gas are weaker than on coal, with 18 companies having adopted oil and gas restrictions vs. 45 insurance companies with restrictions on coal.

The top ranked companies in the report include: Allianz, Generali, Aviva, Swiss Re, AXA, Hannover Re, Axis Capital, Zurich and Munich Re.

David Snyder, vice president, international policy & counsel with the American Property Casualty Insurers Association responded to the scorecard, noting that report’s sponsors are an advocacy group that can demand “certain drastic actions be taken immediately,” but that the role of the insurance industry is more complex.

“We need to help meet energy needs now as well as support the transition to a lower carbon economy,” Snyder said. “Insurers are focused on mitigation to reduce losses resulting from extreme weather events, growth in vulnerable areas, and inflationary pressures as well as other causes. Insurers are strongly supporting many mitigation actions, including better building and land use codes and practices.”

Extreme Weather

Extreme weather events are listed as one of the most serious risks over the next 10 years in a new report out from an international non-governmental organization in Geneva, Switzerland.

The report from the World Economic Forum shows the top four most severe risks over the next 10 years are “extreme weather events, critical change to Earth systems, biodiversity loss and ecosystem collapse, and natural resource shortages.”

It draws on responses from 1,400 risk experts, policymakers and industry leaders, and was produced in partnership with Zurich Insurance Group and Marsh McLennan.

The report lists extreme weather events at the No. 2 most likely severe impact globally over a 10-year period, and the second most likely impact over a two-year period. Misinformation and disinformation were listed as the most likely severe impact over the next two years.

The list of most likely severe impacts over the next 10 years are:

Climate Change and Homes

Extreme weather was also a top concern in an unrelated report also out this week.

More than three-fourths of wealthy Americans and Canadians believe exposure to climate change-driven extreme weather is among the biggest threats to their homes.

A new Chubb report shows 63% percent of respondents to the company’s first annual wealth report say weather-related water damage, such as that from hurricanes and floods, is a major concern. Nearly one-in-three pointed out wildfire risk as a top risk.

The report was detailed in an article by reporter Allen Laman on Insurance Journal. Authors polled 800 high-net-worth people in the U.S. and Canada with investable assets of at least $500,000. The majority of those polled had assets from $1.5 million to $25 million.

“Our research reinforces important perceptions that we have also been hearing directly from our clients,” stated Ana Robic, division president of North America personal risk services at Chubb. “The wealthy and affluent are very much aware of the compounding risks in this environment — from extreme weather, potential lawsuits (and) risks to their property, including the collections they are passionate about.”

Robic advised agents and brokers to feel confident engaging clients to identify and close any gaps in protecting what they value most.

Snowpack and Water

Climate change has impacted snow patterns across the Northern Hemisphere, according to a study in the journal Nature.

The study, Evidence of human influence on Northern Hemisphere snow loss, asserts that human-caused warming has driven declines in March snowpack over the 1981–2020 period examined.

“Using an ensemble of snowpack reconstructions, we identify robust snow trends in 82 out of 169 major Northern Hemisphere river basins, 31 of which we can confidently attribute to human influence,” the study states.

The results not only show snow losses and the impact on water are attributable to climate change, but that they “will accelerate and homogenize with near-term warming,” a trend that promises to pose risks to future water resources.

The report addresses uncertainties about how climate change affects snowpacks by combining observations of snowpack, temperature, precipitation and runoff data with empirical and climate models.

“We use these insights to assess how changes to temperature and precipitation have affected snow water storage and to generalize how snowpack and the runoff it generates will respond to additional warming,” the report states. “Together, our results provide a thorough documentation of the historical and future effects of climate change on snow water storage.”

Past columns:

• World Meteorological Organization Says 2023 Will Easily Break Climate Records
• NOAA: Arctic Summer Surface Air Warmest on Record
• Study: Federal Payouts Bolstered Flood Policy Uptake, Insured Value
• US Climate Report Shows Rising Temps, Greenhouse Gas Emissions Headed Down
• FIO’s Climate-Related Financial Risk Data Collection Finalized