Why U.S. Insurance Companies Keep Covering Fossil Fuels – and What We’re Doing About It

Many investors – and especially Green Century Funds° investors – can imagine a safer, healthier fossil fuel-free future. That’s why Green Century’s advocates work to convince companies to reduce greenhouse gas emissions, protect forests, source renewable energy and more. But as wildfires, floods and extreme temperatures have become more common and climate risk has grown for businesses, we’ve focused on another key driver of the climate crisis: the insurance industry.

Oil and gas corporations need insurance to move forward with fossil fuel exploration and extraction. By refusing to cover these environmentally harmful projects, insurance companies could play a positive role in addressing climate change and avoid significant climate risk: global insured losses from natural disasters last year were estimated at $132 billion, making 2022 the fifth costliest year for insurers on record.

While some European companies have stated they will no longer insure certain types of new oil and gas projects, the U.S. insurance industry has made no such moves. In fact, as U.S. insurers continue to cover major drivers of the climate crisis, they’re sticking customers with the costly consequences: State Farm,* the largest homeowner insurance company in California, announced last month that it would stop selling coverage to homeowners – not just in wildfire zones, but everywhere in the state.

To convince U.S. insurers to keep up with evolving global standards and avoid future losses associated with a warming planet, Green Century led a shareholder advocacy program this year with three of the world’s largest insurers: Chubb*, The Hartford*, and Travelers,* asking each company to phase out the underwriting of new fossil fuel projects. 

Our dialogues with each company were informative, but none agreed to phase out new fossil fuel projects. The Green Century Funds filed shareholder resolutions with the companies so that shareholders could weigh in on whether insurers should continue to underwrite some of the activities most directly responsible for warming our planet.

While no climate-related proposals at insurance companies won majority support this shareholder season, Green Century helped the issue gain widespread visibility, increased board-level discussion, and heightened investor awareness. Going forward, we’ll build on our momentum to drive forward this long-term program to build a green, fossil fuel-free future for our children and grandchildren.

One way you can make an impact is to sign this petition from our nonprofit owners at PIRG urging these three companies to stop insuring climate risks. Fossil fuels won’t go the way of the dinosaur overnight, but sustained pressure from investors, advocates, and everyday people can and will continue to win meaningful policy change in the years to come.

As always, thank you for your support of the Green Century shareholder advocacy program through your investments to make our planet a cleaner, greener, healthier place.