Earth & Environment
February 13 2024: Curbing Big Insurance Companies’ Investment in Drivers of Climate Change
Posted on February 23, 2024 at 12:00 AM
by Jean Stewart, Chair, Environmental Task Force
Big insurance corporations are complicit in our dependence on fossil fuels, the major contributor to the climate crisis we are facing. Many of these firms invest heavily in oil and gas production companies, even as they face difficulties in covering claims from customers losing homes and businesses from climate-driven disasters such as wildfires, storms, and floods.
I learned about the role of insurance companies from a fellow activist with the local chapter of the Sierra Club who was seeking volunteers to testify on this issue at a City Council oversight hearing. When I volunteered, I obtained a lot of information about the investments of insurance companies and of The Travelers Companies, Inc. specifically. In my testimony below, I asked the Council to help push Travelers to develop a new business plan that supports the renewable energy sector and actively combats the climate crisis instead of contributing to it.
Testimony for the Committee on Business and Economic Development:
Performance Oversight of the DC Department of Insurance, Securities and Banking
January 31, 2024
As a longtime DC resident, I am concerned about the well-being of this city I love and of all of us who live and do business here. Specifically, I want to address the dangers of the climate crisis to our health, lives, businesses, and budgets, in the form of increasing heat waves, flooding, violent storms, and episodes of poor air quality. I am testifying to alert the Council and the agency this committee is reviewing now, the Department of Insurance, Securities and Banking (DISB), of the role of large insurance companies in propagating the use of dangerous and polluting fossil fuels in our homes and businesses.
The Travelers Companies, Inc. is the No. 1 provider of homeowners and commercial insurance in DC. I am joining with many in the DC community raising our voices about the dangers and costs to our community of Travelers contributing to the climate crisis, including the higher rates in insurance premiums needed to cover damages to life and property resulting from climate-related events.
There is a real paradox in seeing insurance companies withdrawing from some areas of the country, like California and Florida, due to their increased liability for fire, wind, and flood damage, and raising premiums for so many of the rest of us, while these companies continue to provide insurance for existing and expanded fossil fuel projects. Travelers in particular seeks to take credit for no longer insuring the construction and operation of coal-fired power
plants and restricting underwriting and investments in coal and oil sands energy production, but it has not adopted similar policies for conventional oil and gas-related projects.
In fact, in 2020 Travelers was found to be one of the top three providers of coverage for the oil and gas industry. This just feeds the increasing threats from climate-related events that cost the insurers increasing amounts of money for claims and, for the insured, higher premiums as the companies pass on these costs to us. Based on an August 2023 analysis of 2019 data of the top 16 U.S. property and casualty insurers ranked by assets under management, Travelers was the 4th-largest holder of fossil fuel-related investments.
I ask the Council to express to the DISB these concerns from so many of us in this city about Travelers’ investment policies and to urge the agency to press Travelers to change its business plan from supporting and accelerating the climate-damaging fossil fuel industry to investing instead in renewable, clean energy sources. This will benefit the company in cost savings due to lesser liabilities from fewer disasters and smaller and fewer claims from DC homeowners, landlords, and business owners. This will also spare the insured from increased premium costs from more and larger claims.
This change would also help the District meet Mayor Bowser’s climate goals and the Carbon Free DC strategy she released when she attended the COP28 UN Climate Change Conference. This would be a big step to protect us in DC from worsening climate dangers. On a larger scale, if Travelers, an industry leader, can be convinced by the DISB to stop propping up polluting projects, it could lead to a positive domino effect across the industry.