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insure our future
Extreme Weather Fueled by Climate Crisis Cost Insurers $600 Billion
The report—titled, Within Our Power: Cut Emissions Today To Insure Tomorrow—"examines what 20 years of climate attribution science reveals about today's insurance crisis, explores the status of gross direct premiums from insuring fossil fuels and renewable energy activities, and analyzes the coal, oil, and gas policies of 30 leading primary insurers and reinsurers."
While climate-attributed losses from 2002 to 2022 worked out to around $30 billion annually, the financial burden was not evenly spread out over those 20 years. Instead, the report says, such losses "have recently accounted for a growing share of insured weather losses, showing how decarbonization is crucial to contain soaring insurance costs."
"The climate-attributed share of insured weather losses rose from 31% to 38% over the last decade on average, and their annual growth (6.5%) significantly outpaced thegrowth of the insured losses (4.9%)," the publication explains. "In 2022, $52 billion out of $132 billion was climate-attributed."
The other key findings are:
- Estimated climate-attributed losses for 28 top property and casualty insurers ($10.6 billion) approached the fossil fuel premiums they collected ($11.3 billion) in 2023—and for more than half the companies, they exceeded them;
- The renewable energy insurance market is still under 30% of the size of the fossil fuel insurance market in 2023, threatening to be a bottleneck for investments in the climate transition; and
- At the brink of 1.5°C, insurers are abandoning at-risk communities worldwide while enabling fossil fuel expansion that drives these risks higher—requiring immediate policy and regulatory action.
The report acknowledges that its findings arrive amid scientists' warnings that 2024 is on track to be the first full year to breach 1.5°C—the Paris agreement's target for temperature rise this century. The latest meeting for countries signed on to that treaty, held in Azerbaijan last month, concluded with what critics called a "big F U to climate justice."
Like activists and experts outraged by the conclusion of COP29, Ilan Noy, a professor focused on the economics of disasters and climate change at New Zealand's Victoria University of Wellington, stressed the importance of bolder global action in response to the Insure Our Future report.
"Insurers are fundamentally misunderstanding climate risk by failing to recognize how greenhouse gas emissions have driven up losses throughout this century," Noy said in a statement. "Unless we cut emissions sharply this decade, climate damages will grow exponentially and could overwhelm both insurers and economies."
Laurie Laybourn, director of the U.K.-based Strategic Climate Risks Initiative, similarly suggested that the climate emergency poses an existential threat to the insurance industry while discussing Insure Our Future's report with Forbes' David Vetter.
"Because insurance impacts are mounting and because we don't have an insurance system built for the way that climate change is evolving, this dynamic is only going to get much worse," Laybourn said. "As we're already seeing, governments are having to step in to effectively ensure that insurance can still exist in certain places."
"In Florida, you have a situation where flood insurance is increasingly receding and the government is having to make decisions about how and what to cover," he noted. "It's the case as well in the U.K., where major flooding events led to the creation of Flood Re, a government-backed reinsurance agency to cover places that are effectively uninsurable through private markets."
Warning of a potential "doom loop" in which climate impacts cause instability that impedes adequately ambitious action, Laybourn added that "we need systems that are more resilient so that we can continue to remain focused on decarbonization, even as things get more unstable."
The new report offers a roadmap to a more resilient insurance system. As the document points out, this is the first time Insure Our Future has included policy recommendations for lawmakers and regulators.
The publication urges insurance firms to immediately stop insuring new fossil fuel projects or any customers from the industry that have not published a transition plan for the 1.5°C goal. It also calls on insurers to set their own binding Paris-aligned targets and to divest from coal, gas, and oil companies.
The report further pushes insurers to align stewardship activities, trade associations membership, and public positions with a credible 1.5°C pathway; establish mechanisms to ensure clients fully respect human rights; and explore bringing fossil fuel companies to court "to make polluters rather than insurance customers pay."
'Insure Our Survival': XR Launches Campaign at British Insurance Industry Awards Night
"This is just the beginning," Insure Our Survival spokesperson Alex Penson said in a statement. "Thousands of XR activists stand ready to focus their nonviolent direct action energy on the insurance firms who are greenlighting the climate crisis by providing fossil fuel crooks with the insurance they need to dig and drill for oil, gas, and coal."
"It's time for insurers to use their superpower or be held responsible when all of our children face a future like the children in the photographs we showed at our protest,"
The insurance industry has emerged as a target of the climate movement in recent years, as advocates point out that new fossil fuel projects would not be able to move forward without it.
"The insurance industry has a superpower," Penson said. "At a stroke, it could stop the fossil fuel crooks in their tracks and save the lives of billions of people threatened from the worst-case climate scenarios that scientists are saying are increasingly possible."
However, to date the industry has not chosen to use that power. According to the most recent report from the global Insure Our Future campaign, not one of the 30 major insurance firms it analyzed in 2023 had policies in line with limiting global heating to 1.5°C above preindustrial levels. The insurers included in the U.K.-based Lloyd's market were the leading fossil fuel insurers, Insure Our Future found, earning $1.6-2.2 billion in premiums from oil, gas, and coal in 2022.
"It's time for insurers to use their superpower or be held responsible when all of our children face a future like the children in the photographs we showed at our protest," Penson continued, "struggling to survive in barely habitable countries haunted by crop failures, malnutrition, deadly storms, floods, and heatwaves."
At Wednesday's event, XR activists held up photos taken by photographer Gideon Mendell, showing massive flooding in the U.K. that has been made worse by the climate emergency. They also held up signs reading, "Stop Insuring New Fossil Fuels" and "Insure Our Survival."
(Photo: Extinction Rebellion)
At the sound of a violin, XR's Oil Slickers—activists draped in black cloth to resemble an oil spill—glided around the insurance luminaries as they approached the hall for the industry's annual awards ceremony.
(Photo: Extinction Rebellion)
A choir also sang a song to the tune of "Imagine," including the line, "Imagine all insurers, fighting for us all."
"Last night we challenged insurers having a good time and congratulating each other on their good work at the Royal Albert Hall to face up to some uncomfortable truths—that some of their work leads to flooded homes and wrecked lives for their customers facing more and more climate crisis-driven extreme weather events," Penson said.
The activists also distributed business cards to the attendees warning them that, if they continued to back new fossil fuel projects, XR would target them with direct action designed to hurt both their reputations and their bottom line.
Pension said: "We left the leading lights of the industry in no doubt about what they need to do: Stop insuring new oil, gas, and coal and focus on underwriting renewable energy to speed a just transition to a low or no-carbon economy."
XR's U.K.-based Insure Our Survival campaign emerged from the global Insure Our Future campaign, and in particular an international week of action it organized in late February and early March, including events in London and around the U.K.
About a month after the protests, Zurich Insurance announced that it would no longer underwrite new oil and gas projects.
Sierra Signorelli, Zurich's chief executive of commercial insurance, said at the time that Zurich took the action in keeping with its goal of reaching net-zero emissions by 2050.
"Further exploration and development of fossil fuels isn't required for the transition," Signorelli said. "We think it's the right time to evolve our position."
Insure Our Survival campaigner Lucy Porter said that since the spring, many insurance employees, in both senior and junior positions, had spoken to XR saying they supported a move away from backing climate-polluting projects.
"We intend to work with them to make insurance part of the climate solution, not part of the problem, and we invite other people in the industry to contact us and work with us," Porter said.
Porter continued, "To those who continue to put their profits before a livable planet we say: We will hold you accountable through an escalating campaign of nonviolent direct action across the country."
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