California Insurance Commissioner launches report and site detailing insurer fossil fuel investments

Written by Adam Cadle

19/04/2022

A new report and web page detailing US insurance companies’ investments in fossil fuels has been issued by Insurance Commissioner Ricardo Lara, as part of his effort to protect consumers from the impacts of climate change.

The report is the “most exhaustive study” of fossil fuel investments by insurance companies ever done by any US state. For the first time, the report identifies insurance company holdings in green bonds that support clean energy investments and other environmental projects, helping consumers and the California Department of Insurance measure insurance companies’ progress toward fighting climate change.

Californians can visit the Department’s website and type in the name of their insurance company to find out what percentage of their premiums are invested in fossil fuels. For example, the new report shows insurance companies continue to be heavily invested in fossil fuels, including carbon-intensive tar sands, which is one of the most environmentally destructive forms of oil extraction. Although investments in green bonds doubled from 2018 to 2019, the portion of investments in green bonds is small compared with the overall investment potential of the insurance industry. The data comes from publicly disclosed 2018 and 2019 financial investment information, which was analysed by S&P Global.

California is the nation’s largest insurance market and fourth largest insurance market in the world, and Commissioner Lara is working with other states to enhance climate disclosures at the national level. He led a bipartisan effort by the National Association of Insurance Commissioners to adopt a new global standard for reporting insurance company climate risks on 8 April in alignment with the Task Force on Climate-Related Financial Disclosures, or TCFD. Insurance regulators from France, Switzerland, and the United Kingdom currently require TCFD-aligned reports. US financial regulators such as the US Securities and Exchange Commission are also taking steps toward requiring TCFD-aligned disclosures for other financial institutions.

While 28 insurance companies provided TCFD-compliant reports in 2021, this list will grow to nearly 400 insurance companies and groups - representing nearly 80% of the regulated US insurance market - as a result of this action.

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