Baden-Baden, 20 October 2023 – Ahead of the annual reinsurance congress in Baden-Baden, Urgewald and the international Insure Our Future network call on reinsurers to end their continued unqualified support of the fossil fuel industry, emissions from which are the prime contributor to global climate change.
Reinsurance companies, whose role is to provide insurance to the insurance industry, have been faced with the huge and rising costs of natural catastrophes, increasing substantially in recent years, in large part due to climate change. The risk models used by reinsurance companies have repeatedly failed to properly account for climate-related damages, which cost the insurance industry $120 billion in 2022 alone.
To try and stem their losses, some reinsurance companies have exited or significantly reduced their capacity in the natural catastrophe market, while others have raised their prices very significantly and these costs are passed on ultimately to consumers. At the same time, some primary insurers have stopped providing cover to households and businesses most impacted by climate change or raised the premiums in these regions to unaffordable levels. By any measure, this is not a sustainable business model.
In light of the worsening climate crisis and the urgent calls for action made by the Intergovernmental Panel on Climate Change, the world’s foremost authority on climate change, Urgewald and Insure Our Future repeat their demand for all reinsurers attending the Baden-Baden congress to immediately stop all insurance and investments in fossil fuel expansion. In addition, reinsurers must immediately provide a concrete 1.5°C -aligned phase-out plan for all remaining fossil fuel projects and companies.
“The reinsurance industry is ruining people's lives and their own business model by their continued underwriting of fossil fuel companies. They aim for short-term profits, which their customers and climate victims have to pay for, but the climate crisis will make increasingly large parts of the planet uninsurable sooner or later. They need to act now.”
“The Chief Executives of re/insurers, including Peter Zaffino of AIG and John Neal of Lloyd’s of London, should be ashamed. They continue to insure and invest in fossil fuel companies with little or no restriction and are accomplices in climate crimes. Continuing to re/insure fossil fuels is a toxic recipe for disaster for the whole world. CEOs like Joachim Wenning of Munich Re and Christian Mumenthaler of Swiss Re can take some pride in the restrictions they have placed on reinsuring some fossil fuels, but we remind them that real climate leaders also do not insure new fossil gas infrastructure (or US coal mines*).”
Notes
1) Natural catastrophes, exacerbated by human-made climate change, caused an estimated $270 billion in damages in 2022, of which approximately $120 billion were insured. They left a trail of destruction affecting millions of people worldwide, with the biggest impacts on poor and marginalised communities which have contributed least to climate change:
Swiss Re Institute (March 29 2023): https://www.swissre.com/institute/research/sigma-research/sigma-2023-01/5-charts-losses-natural-catastrophes.html
Munich Re (January 20 2023): https://www.munichre.com/en/company/media-relations/media-information-and-corporate-news/media-information/2023/natural-disaster-figures-2022.html.
2) Homeowners facing rising prices and insurers exiting climate affected regions:
AP News (Sept 20 2023): Homeowners face rising insurance rates as climate change makes wildfires, storms more common.
The Hill (August 30 2023): Climate change raising risks of financial disaster for homeowners, insurers and bankers.
Perth Now (Sept 13, 2023): https://www.perthnow.com.au/technology/aussies-feel-the-cost-of-climate-change-new-report-finds-c-11887931
3) Reinsurance prices rising:
https://www.voaafrica.com/a/climate-change-leads-reinsurers-to-reduce-their-coverage/7266472.html
https://www.hannover-re.com/1978546/monte-carlo-2023
4) Intergovernmental Panel on Climate Change 2023 report: https://www.ipcc.ch/reports/
*US Coal Mines: https://us.insure-our-future.com/insurance-giants-deeply-involved-in-underwriting-u-s-coal-undermining-public-net-zero-commitments/
