The Insurance Industry’s Role in the Climate Crisis
By Pada Schaffner and Aza Evans-Townsend, George Washington University students and Sunrise GW organizers
Last summer, deadly heat waves made more likely by climate change swept across Asia, Europe, North Africa, and North America. Antarctic glaciers hemorrhaged ice faster than they have in millennia. Dozens of species were declared extinct. Scientists have made clear that the health of our planet as well as humanity is dependent on what actions we take in the coming years. In spite of all this, global financial institutions continue to fund and insure new fossil fuel projects. While it is clear that fossil fuel companies bear direct responsibility for the vast majority of emissions, their projects would not be possible without the backing of major insurers. Because of this, insurance companies have the ability to tackle the climate crisis in a completely unique way: refusing to insure new fossil fuel infrastructure.
Many insurance companies have already sworn off some types of fossil fuel projects. Forty-one major insurers have committed to end or restrict underwriting for new and expanding coal projects, although only 22 have committed to restrict underwriting for tar sands projects, and just 13 have committed to restrict the insuring of oil and gas projects. This is a start, but it has some glaring issues.
The IPCC has reported that oil alone accounts for around a third of the world’s total carbon emissions. Despite countries committing to the Paris Agreement in 2015, the UN reported the global rate of oil, coal, and gas production are set to be 120% over what would be consistent with a goal of 1.5°C. Considering that the majority of insurers have refused to take a stance on oil and gas projects, their action against coal projects seem insincere at worst, and incomplete at best.
George Washington University (GW) sends dozens of graduates into the insurance industry each year. Companies like Liberty Mutual, Chubb, and American International Group (AIG) — among the world’s largest insurers of fossil fuels — have accepted hundreds of GW alumni. In fact, Douglas Steenland, an alumnus of the GW Law School, sits on the Board of Directors of AIG. Although AIG has committed to restricting underwriting of new coal, tar sands, and Arctic drilling projects, the insurer is still one of the largest supporters of oil and gas projects.
While many other major insurers have taken steps to completely pull out of the oil and gas industry, AIG refuses to budge, separating the company from 13 other global insurers which have committed to ambitious oil and gas exit strategies. Oil and gas projects directly harm indigenous and frontline communities across the globe. Insurance companies can no longer be complicit in such destruction.
The urgency of climate change requires action, and we are running out of time. Cutting ties with the fossil fuel industry is the best way societies can make meaningful change. AIG must immediately stop insuring new and expanding oil and gas projects that directly destroy communities and environments internationally. They must also take steps to rapidly phase out coverage and investments in the fossil fuel industry completely, as the company committed to in March 2022.
The insurance industry has a uniquely important role in addressing the fossil fuel industry, and must acknowledge climate change as a liability. It is important to equip GW students with this knowledge before entering the job market. Public Citizen, a prominent progressive nonprofit, provides resources for students and the public to push insurance companies like AIG on climate. GW students who care about climate change should take action today by using these resources to send a message directly to AIG executives and tell them to put our future over fossil fuel profits.
