Reps. Huffman and Jones Call Out U.S. Insurance Company for Investing in Fossil Fuel Projects Despite Climate Risks

WASHINGTON, April 27 -- Rep. Jared Huffman, D-California, issued the following news release:

U.S. Representatives Jared Huffman (D-CA) and Mondaire Jones (D-NY), along with 14 colleagues, called out U.S. insurance companies for continuing to invest in fossil fuel expansion projects despite the risks the projects pose to the country's economic stability and furthering the climate crisis. In letters to 13 of the top U.S. insurers -- American Insurance Group, Chubb, Berkshire Hathaway, Liberty Mutual, Travelers, The Hartford, Starr Insurance Companies, W.R Berkley, FM Global, Markel, Skyward Specialty Insurance, Lincoln, and Great American Insurance Group -- the lawmakers raised concerns that the continued investment in fossil fuels by insurance companies runs counter to the scientific consensus on the growing climate crisis. The lawmakers are urging these companies to fully consider the environmental, economic, and financial risks of climate change before underwriting fossil fuel projects.

"At present, the insurance industry profits from the expansion of fossil fuels while ripping the rug out from under the communities most affected by climate change. Continued investment in the expansion of fossil fuels stands in direct contradiction to the scientific consensus and the United States' obligations under the Paris Climate Agreement. It also harms communities on the front lines of the climate crisis and threatens financial stability at large. We urge you to consider the full impact of your continued support for fossil fuel expansion," wrote the lawmakers.

"Insurance companies are meant to protect us from catastrophic risks, but the industry's ongoing support for fossil fuel expansion puts the communities they serve and our planet in peril," said Deanna Noel, climate campaign director at Public Citizen. "U.S. insurers continue to lag behind their global counterparts by refusing to rule out support for new oil and gas, even as companies like Chubb and Liberty Mutual are dropping coverage for some California homeowners at risk of climate-driven wildfires. This trend will only get worse if the insurance industry continues to enable new oil and gas projects. Anything short of an end to fossil fuel expansion is a slap in the face to future generations and further diminishes our ability to avert climate catastrophe."

Elana Sulakshana, Senior Energy Finance Campaigner at Rainforest Action Network, said: "Despite the intensifying impacts of wildfires, floods, and other climate change-fueled natural disasters on communities around the world, U.S. insurers have fallen starkly behind their global peers when it comes to taking responsibility for their central role in the fossil fuel economy. While leading global peers are exiting the coal sector and restricting underwriting for new oil and gas projects, Chubb, Liberty Mutual, Travelers, and other U.S. insurers continue to provide a lifeline to the coal industry and underwrite the buildout of oil and gas infrastructure that the climate cannot afford."

"Insurance companies must understand that backing dead end fossil fuel development is as bad for business as it is for our families and the animals and resources we depend on to survive. Climate change already impacts Indigenous Peoples at a greater rate than the rest of the world, and we will never stop using our strength and our voices to protect every being and element that feeds our bodies and spirit," said Bernadette Demientieff, Executive Director of the Gwich'in Steering Committee. "It's time for every insurance company to ensure the rights of the Indigenous Peoples and wildlife who rely on the Arctic Refuge for survival instead of insuring oil drillers who will destroy this sacred place."

Helen Humphreys, Communications Coordinator at Connecticut Citizen Action Group, said: "Hartford Connecticut is known as the insurance capital of the world. Our state plays host to a number of large U.S. insurers, including Travelers and The Hartford. However, these insurers are failing to protect the very communities they operate in by investing in and underwriting climate-destroying fossil fuel projects. Our planet is sending urgent warnings: record breaking temperatures, more extreme storms, historic droughts, flooding and sea level rise. Climate activists from all over Connecticut have been urging these companies for years to stop propping up the fossil fuel industry. But we have only been met with greenwashing and solutions that fall short. We cannot afford to wait any longer - Travelers and The Hartford must take real action and stop risking our residents' future."

The Intergovernmental Panel on Climate Change (IPCC) and the Biden administration have warned that keeping the global temperature rise below 1.5 C is critical to avoiding a catastrophic climate crisis in our communities. Yet, U.S. insurers are well behind their global peers on mitigating climate risk and continue to finance new fossil fuel projects in the face of warnings that such projects could raise temperatures above the 1.5 C threshold.

No U.S. insurance company has adopted comprehensive restrictions on underwriting and investments in fossil fuel expansion, including coverage restrictions for new oil and gas production projects. Only five U.S. insurers have restricted underwriting and investments in coal and only three U.S. insurers have restricted underwriting in tar sands. Meanwhile dozens of global insurance companies have made commitments to restrict investment in these types of projects.

Reps. Huffman, Jones, and their colleagues also called out U.S. insurers for investing in fossil fuels to rake in profits while they scale back services and pass climate related costs onto consumers. Companies like AIG, Chubb, and Liberty Mutual continue to fund fossil fuel expansion projects while cutting services in wildfire-prone areas in California. The lawmakers are concerned that this pattern will continue in communities most affected by increased storms, flooding, and fires due to climate change.

In addition to Reps. Jones and Huffman, the letters were signed by U.S. Representatives Ritchie Torres, Jesus G. "Chuy" Garcia, Marie Newman, Andy Levin, Nanette Diaz Barragan, Mark Takano, Rashida Tlaib, Jamaal Bowman, Ed.D., Cori Bush, Eleanor Holmes Norton, Alan Lowenthal, Alexandria Ocasio-Cortez, Sheila Cherfilus-McCormick, and Adam B. Schiff.

Congressman Huffman has been a leader in the effort to end the financing of the fossil fuel industry to address the climate crisis. Last year, he introduced the Sustainable International Financial Institutions Act of 2021, which would tackle the problem of international financial institutions helping to finance fossil fuel projects that are accelerating climate chaos. In 2020, he led 32 colleagues in sending a letter to five of the largest U.S. banks urging them not to provide financing for oil drilling and development in the Arctic National Wildlife Refuge.

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April 27, 2022

To: Peter Zaffino, Chairman and CEO, American Insurance Group, 175 Water St #14, New York, NY 10038

Dear Mr. Zaffino,

We write to you with concern over the U.S. insurance industry's role in underwriting and investing in fossil fuel expansion projects. Continued investment in fossil fuels is a threat to the health of our planet and runs counter to the scientific consensus on climate change. The insurance industry and our economy at large face unprecedented risks due to climate change- risks that must be addressed in line with the urgency and scale of the crisis.

The 2022 report by the Intergovernmental Panel on Climate Change (IPCC) explains in grave detail that the climate crisis is already here, and its impacts are sweeping and severe./1 "Widespread, pervasive impacts to ecosystems, people, settlements, and infrastructure have resulted from observed increases in the frequency and intensity of climate and weather extremes, including hot extremes on land and in the ocean, heavy precipitation events, drought and fire."/2 Under the Paris Climate Agreement, President Biden has committed the United States to a 50 percent reduction in greenhouse gas emissions by 2030 and net zero emissions by 2050./3 The IPCC and the Biden Administration agree that it is critical to limit global temperature rise to below 1.5 C above pre-industrial levels to avoid the most catastrophic effects of climate change on our communities.

To stay below a 1.5 C threshold, the International Energy Agency has made clear that there can be no new development of fossil fuel projects./4 Despite the scientific consensus, no U.S. insurance company has adopted comprehensive restrictions on underwriting and investments in fossil fuel expansion. While we are encouraged that some U.S. insurers have taken steps to restrict investment in the most polluting fossil fuels, including coal and tar sands, fossil fuel expansion of any kind is inconsistent with current scientific realities.

U.S. insurers remain well behind their global peers on mitigating climate risk. U.S. companies continue to be among the largest insurers of oil and gas in the world, supporting new fossil fuel projects that our planet can ill afford./5 Three global insurers--AXA, Generali, and Suncorp--have adopted policies to restrict coverage for new oil and gas production projects. No U.S. insurers have followed suit./6 At least 38 global insurers have restricted underwriting and investments in coal, but only five U.S. insurers are among them./7 At least 17 global insurers have restricted underwriting in tar sands, but only three U.S. insurers have done so./8 At least 14 global insurers have adopted restrictions on underwriting Arctic oil and gas projects, but AIG is the only U.S. insurer to have made this commitment./9

By enabling the expansion of fossil fuels, the insurance industry is putting its own financial viability and our economic stability at large in peril. The physical effects of climate change, including extreme weather events, could significantly impair the value of an array of real and financial assets and the institutions who own or have financial exposure to them./10 The increase in frequency and severity of wildfires, floods, hurricanes, and droughts will disrupt supply chains, compress corporate profits, drive up insurance claims, reduce the availability of insurance, and generally limit the ability of affected borrowers to repay debt./11

The insurance industry is already seeing the effects of climate change and acting accordingly. Companies like AIG, Chubb, and Liberty Mutual have begun scaling back their offerings in wildfire-prone areas in California./12 As wildfires become more severe, storms increase in frequency, and sea-level rise affects more coastal communities, we expect the insurance industry will continue to scale back offerings and transfer rising costs on to the consumer. Reductions in the availability of insurance and rising insurance costs threaten to choke off economic development in communities that are already weakened by intensifying floods, fires, and storms./13

At present, the insurance industry profits from the expansion of fossil fuels while ripping the rug out from under the communities most affected by climate change. Continued investment in the expansion of fossil fuels stands in direct contradiction to the scientific consensus and the United States' obligations under the Paris Climate Agreement. It also harms communities on the front lines of the climate crisis and threatens financial stability at large. We urge you to consider the full impact of your continued support for fossil fuel expansion and appreciate your attention to this urgent matter.

Sincerely,

Mondaire Jones, Member of Congress

Jared Huffman, Member of Congress

Nanette Diaz Barragan, Member of Congress

Jamaal Bowman, Ed.D., Member of Congress

Cori Bush, Member of Congress

Sheila Cherfilus-McCormick, Member of Congress

Jesus G. "Chuy" Garcia, Member of Congress

Andy Levin, Member of Congress

Alan Lowenthal, Member of Congress

Marie Newman, Member of Congress

Eleanor Holmes Norton, Member of Congress

Alexandria Ocasio-Cortez, Member of Congress

Adam B. Schiff, Member of Congress

Mark Takano, Member of Congress

Rashida Tlaib, Member of Congress

Ritchie Torres, Member of Congress

Mondaire Jones, Member of Congress

Jared Huffman, Member of Congress

Nanette Diaz Barragan, Member of Congress

Jamaal Bowman, Ed.D., Member of Congress

Cori Bush, Member of Congress

Sheila Cherfilus-McCormick, Member of Congress

Jesus G. "Chuy" Garcia, Member of Congress

Andy Levin, Member of Congress

Alan Lowenthal, Member of Congress

Marie Newman, Member of Congress

Eleanor Holmes Norton, Member of Congress

Alexandria Ocasio-Cortez, Member of Congress

Adam B. Schiff, Member of Congress

Mark Takano, Member of Congress

Rashida Tlaib, Member of Congress

Ritchie Torres, Member of Congress

Footnotes:

1/ Hans-Otto Portner et al., Climate Change 2022: Impacts, Adaptation, and Vulnerability, Intergovernmental Panel on Climate Change, Summary for Policymakers (February 2022) https://www.ipcc.ch/report/ar6/wg2/.

2/ Id.

3/ FACT SHEET: President Biden Sets 2030 Greenhouse Gas Pollution Reduction Target Aimed at Creating GoodPaying Union Jobs and Securing U.S. Leadership on Clean Energy Technologies. The White House (April 2021) https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet-president-biden-sets-2030- greenhouse-gas-pollution-reduction-target-aimed-at-creating-good-paying-union-jobs-and-securing-u-s-leadershipon-clean-energy-technologies/.

4/ Stephanie Bouckaert et al., Net Zero by 2050: A Roadmap for the Global Energy Sector, International Energy Agency (May 2021) https://www.iea.org/reports/net-zero-by-2050.

5/ Time for the Insurance Industry to Unfriend Oil and Gas, Insure our Future (June 2020) https://insureourfuture.co/wp-content/uploads/2020/06/InsureOurFuture-Oil-and-Gas-Insuance-Briefing-0620.pdf.

6/ Scorecard on Insurance, Fossil Fuels, and Climate Change, Insure Our Future (November 2021) https://insureour-future.com/wp-content/uploads/2021/11/2021-IOF-Scorecard.pdf.

7/ Id.

8/ Id.

9/ Our Arctic Refuge (March 2022) https://ourarcticrefuge.org/wp-content/uploads/2022/03/FINAL-arctic-scorecard2022.pdf.

10/ A call for action: Climate Change as a source of financial risk, Network for Greening the Financial System (April 2019) https://www.banque-france.fr/sites/default/files/media/2019/04/17/ngfs_first_comprehensive_report_- _17042019_0.pdf. 11/ Patrick Bolton et al., The green swan: Central banking and financial stability in the age of climate change, Bank for International Settlements (January 2020) https://www.bis.org/publ/othp31.pdf.

12/ Leslie Schism, Wildfire Risk in California Drives Insurers to Pull Policies for Pricey Homes, The Wall Street Journal (January 2022) https://www.wsj.com/articles/wildfire-risk-in-california-drives-insurers-to-pull-policies-for-pricey-homes11642593601; Patrick Dwire, Insurance companies recalibrating the risk of wildfires- and dropping some clients, Tracey Press, (July 2018) https://www.ttownmedia.com/press_banner/news/insurance-companies-recalibrating-the-risk-ofwildfires--and-dropping-some-clients/article_7a4ca88a-8ad7-11e8-af97-6f3541d763b2.html.

13/ Christopher Flavelle, Climate Change Is Bankrupting America's Small Towns, The New York Times (September 2021) https://www.nytimes.com/2021/09/02/climate/climate-towns-bankruptcy.html.