Public Citizen: California Climate Insurance Disclosure Bill Stalls
Targeted News Service (Press Releases)
The California Assembly Insurance Committee has declined to hold a hearing on a bill that would require insurance companies to disclose their role in fueling the climate crisis.
The Insurance Investment Disclosures Bill (AB 1694), introduced by Assemblymember Marc Levine (D - Marin County) would mandate transparency and public disclosure by insurance companies of their investments in and underwriting of policies for fossil fuel companies and projects.
By refusing to hear the bill in the final committee meeting of the session, the committee has all but doomed the Insurance Investment Disclosures Act for this year. Last week, 34 state and national organizations wrote to the Insurance Committee in support of the bill.
"The Assembly Insurance Committee is where bills to protect consumers and regulate the insurance industry go to die. Insurers have spent $1.5 million making campaign contributions to secure the committee's support, including $231,000 to Committee Chair Tom Daly alone, in just the last 4 years. Homeowners assaulted by wildfires then abandoned by their insurance companies deserve better," said Carmen Balber, executive director of Consumer Watchdog. "Today's action by CDI does nothing to illuminate insurers' fossil fuel underwriting - leaving a massive gap in the commissioner's and consumers' knowledge of insurance companies' exposure to, and contributions to, climate change."
News of the committee refusing to hear the bill comes as the California Department of Insurance released a report detailing the fossil fuel investments held by insurance companies operating in the state, revealing $536,000,000,000 invested in coal, oil, and gas. The data included in the report details only part of what the Insurance Investment Disclosures Bill would have required, and fails to include companies' underwriting of insurance policies for fossil fuel firms and projects.
"Insurers are enabling the climate chaos that endangers people and property and harms so many communities across California. We are deeply disappointed that the Insurance Investment Disclosures Bill, which would have mandated disclosure of both fossil fuel underwriting and investment disclosures, will not move forward this session," said East Peterson-Trujillo, Climate Financial Policy Campaigner with Public Citizen. "Public Citizen applauds the Department of Insurance for providing updated data on California insurers' fossil fuel investments. However, Commissioner Lara has made it clear a key motivation for releasing this data is to help highlight the role insurers continue to play in fueling the climate crisis. Without the complementary disclosure of insurers' underwriting of policies for fossil fuel projects, consumers and regulators are left with an inadequate picture."
Public Citizen urges Commissioner Lara to extend insurer disclosures to underwriting to get a full understanding of their climate risk exposure and calls on the Commissioner and the Department to begin managing the transition risk that insurers are clearly exposed to, given these findings.
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The Honorable Tom Daly, Chair, Assembly Insurance Committee
Re: Support for AB 1694 (Levine) Climate Risk Disclosure Bill
cc: Assemblymember Marc Levine, Assembly District 10
Dear Chair Daly,
The 34 undersigned organizations write to you in support of AB 1694 (Levine), directing the insurance commissioner to use existing powers to require all insurance companies licensed to do business in California to fully disclose their investments in fossil fuel-related entities, and the fossil fuel-related companies and projects they insure. This bill also requires the California Department of Insurance (CDI) to publish that information on its website.
Insurance companies in California are facing threats to their solvency and ability to write insurance policies throughout California due to the increase in frequency and severity of wildfires, exacerbated by climate change. Property and casualty insurers experienced record losses over several recent California wildfire seasons./1 In response, insurers have reassessed their underwriting, often with the effect of raising prices or reducing coverage availability in wildfire-prone areas, driving a rebound in profits at the expense of customers./2
By investing in and insuring fossil fuel projects and companies, insurance companies contribute to the very climate change-driven wildfires which they blame for increasing homeowners' insurance premiums, policy non-renewals, and cancellations. The insurers' responses to climate risk, such as policy cancellations or non-renewals and sky-rocketing premiums for entire zip codes, burden communities already at risk from climate disasters. Investment in fossil fuel-related assets also exposes insurers to risks from stranded assets, falling asset prices, and reputational harm.
The Insurance Commissioner has broad authority to require insurance companies to disclose any information necessary to ensure consumers' access to insurance and a responsibility to ensure the financial stability of the companies it oversees. CDI gathered relevant information about insurers' fossil fuel investments in 2016, and identified that they were inconsistent with California's climate targets./3 Unfortunately, CDI has not expanded or updated this invaluable data source since then. Acquiring this data annually will help the Insurance Commissioner to protect the financial solvency of insurers and the interests of California's consumers.
We urge your support for AB 1694 (Levine) when it is heard in the Assembly Insurance Committee.
Americans for Financial Reform
Atmos Financial PBC
Businesses for a Livable Climate
CALPIRG (California Public Interest Research Group)