US Insurance Giants Ditching Homeowners, But Still Underwriting Climate-Killing Coal Industry

Reports have mounted in recent months about U.S. insurers announcing plans to end new insurance policies for homeowners in certain parts of the country, including California, where residential areas are increasingly vulnerable to wildfires, and Florida, where residents face the threat of hurricane and flood damage.

But a new report by consumer watchdog Public Citizen and advocacy group Insure Our Future shows that insurance companies' newfound awareness of the climate emergency hasn't stopped them from continuing to underwrite the top source of the carbon dioxide emissions that are heating the planet, causing sea levels to rise, and fueling extreme weather events.

Insurance companies including Liberty Mutual, Swiss Re, American International Group (AIG), Lloyd's of London, and Zurich are among 16 firms that are still underwriting the top 25 coal mines in the United States.

The companies' support has allowed the pollution-causing industry to produce 60% of the country's current coal output, according to Public Citizen.

Last year, the top five insurers listed above issued coverage for the production of more than 245 million tons of coal, representing at least 41% of the coal produced.

AIG was the worst offender last year, underwriting at least 28% of coal production, and companies including Swiss Re and Liberty Mutual blatantly violated their own stated policies on coal.

"The hypocrisy is staggering," said Public Citizen.

The companies' continued support for coal—combined with their abandonment of homeowners—amounts to "greenwashing," said Carly Fabian, an insurance policy advocate for Public Citizen.

"While insurance companies claim to have seen the light on climate change when they abandon homeowners, that same concern appears to be nowhere in sight when they chose to insure coal mines," said Fabian. "Insurance providers seem to be greenwashing their images by claiming to restrict coal, while undermining their policyholders and their own stated policies to continue underwriting one of the dirtiest forms of energy."

Public Citizen's analysis found that Liberty Mutual has violated its own coal policy, which states that it will "no longer accept underwriting risk for companies where more than 25% of their exposure arises from the extraction and/or production of energy from thermal coal" and that it will phase out coverage for companies with such exposure by 2023.

Liberty Mutual underwrote Signal Peak Energy's Bull Mountain Mine No. 1 in 2022; while the company's policy does not define "exposure," the project likely violates the insurer's stated threshold because 90% of Signal Peak's revenue is derived from coal.

While it continues to underwrite coal production, Liberty Mutual announced in July that it would stop issuing business owners policies in California.

Swiss Re also violated its own policy, by underwriting a coal mine operated by Buckskin Mining Company, which generates 90% of its revenue from the coal business and produces nearly 10 million metric tons of coal each year.

The insurer has stated that it will phase out thermal coal production coverage by 2030 in Organization for Economic Cooperation and Development (OECD) countries and by 2040 worldwide, and that until then it will "exclude re/insurance support to companies or projects that have more than 30% of exposure to thermal coal."

Fabian said that "the choices of these companies reflect a clear double standard in who is expected to pay the price for climate change. The insurance industry needs to muster the courage to cut their coverage for fossil fuels before it becomes too risky to insure the rest of us."x

Zurich's coal policy contains a loophole, said Public Citizen, that has allowed the company to insure thermal coal mines even though in 2019 it said it would "no longer underwrite or invest in companies that generate more than 30% of their revenue from mining thermal coal or produce more than 20 million tons of thermal coal per year."

The group said open records requests for insurance certificates showed that:

From 2020 until November 2022, Zurich insured two subsidiaries of Alpha Metallurgical Resources—Alpha Coal West and the third-largest U.S. coal producer, Alpha Natural Resources—for operation of the Eagle Butte and Belle Ayr mines. While the mines are among the top producers of U.S. thermal coal, Zurich is not violating its coal policy because it applies only to companies involved in the thermal coal business and in this case, the companies involved appear to conduct most of their business in metallurgical coal, not thermal coal. This underscores the need for Zurich, and all insurers, to explicitly address metallurgical coal in underwriting restrictions, since metallurgical coal, which is currently the basis for making steel, is a significant source of carbon emissions and low-carbon alternatives exist.

"We expected some companies to be underwriting coal projects, but the data underscore the loopholes in their policies and disregard for public commitments across the insurance industry," said Fabian.

Meanwhile, Zurich's affiliate, Farmers Insurance Group, is among the companies that have pulled out of Florida due to climate risks.

Clara Vondrich, senior policy counsel at Public Citizen, said U.S. insurers are "double-dipping in the worst way."

The report called on all insurance firms to:

• Immediately cease insuring new and expanded coal mines or coal power infrastructure projects;
• Immediately stop insuring any new clients from the coal sector which are not aligned with a credible 1.5ºC pathway, and stop offering any insurance services which support the expansion of coal production with existing clients;
• Phase out all insurance services for existing coal sector clients which are not aligned with a credible 1.5°C pathway by the end of 2024; and
• Immediately divest all assets, including assets managed for third parties, from coal companies that are not aligned with a credible 1.5ºC pathway.

The report was released days before Insure Our Future and other groups are set to rally at the Insurance Leadership Forum in Colorado Springs, where advocates will demand companies "insure our communities instead of oil, gas, and coal."

"On October 1, insurance executives will be gathering in Colorado Springs to play golf, drink cocktails, and discuss 'insurance leadership,'" said Rainforest Action Network. "Join us as we rally to demand real climate leadership!"