Municipalities set the bar for climate action but their insurance premiums fund fossil fuels
Municipalities spend a lot on insurance premiums to protect their employees, their infrastructure, and vital public services, increasingly so in the face of uncertainties brought by climate change. However, these premiums are being invested into fossil fuels and in many cases, the same companies providing insurance to a city also insure construction and operation of coal plants, gas pipelines, and offshore oil drilling.
As policyholders, cities can help create demand for sustainable insurance. They can call on their carriers to stop underwriting and investing in fossil fuels and enact procurement policies giving preference to carriers that have limited fossil fuel financing.
Efforts to date:
Boulder County, CO adopted a resolution to screen prospective insurers on their insurance and investments in fossil fuels and use that information to inform their decision-making on insurance procurement.
Los Angeles City Council adopted a motion that required the city to deliver an inventory of its insurance carriers and a method for evaluating prospective insurers based on their underwriting and investments in fossil fuels.
The Boston suburbs of Cambridge and Somerville both passed resolutions; the latter will give preference for purchasing insurance from insurers that have adopted policies restricting insurance and investments for fossil fuels.
San Francisco Board of Supervisors passed a resolution urging the city to cut ties with insurers that invest in or insure coal and tar sands companies and projects.
The City of Paris passed a resolution (English version here) in 2018 calling on major insurers to end support for the coal industry, citing its impact on climate change and the pollution that causes 23,000 premature deaths across Europe every year.
Elected officials, risk managers, and sustainability officers can all be a part of this solution. Aligning your city’s insurance procurement policies with sustainability goals makes sense and is a real solution from the public sector.
Why buy insurance against climate risks from the same insurance companies that are making the problem worse by financing fossil fuels?
RESOURCES FOR YOUR CITY OR COUNTY:
- Insurance: A Climate Opportunity for Local Governments
- Roadmap: Decarbonize Your City’s Insurance
- Survey Tool to Assess Your Insurers’ Sustainability Policies
- Sample Resolution on Insurance and Fossil Fuels
- Sample Letter to Your City’s Insurance Carriers
- Sample Sustainability Policy on Insurance