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The insurance sector's role in accelerating climate breakdown and nature loss, and its failure to protect human rights

It’s not immediately obvious how the insurance industry can have such a big impact on climate change, biodiversity loss, and the protection of human rights and public health. But if this mammoth industry that accounts for over 7% of the global economy used its money and influence in the right way, it could accelerate the transition to a green future. Unfortunately, they're far from doing this.

How the insurance industry impacts people and planet

Insurance gives us peace of mind with the things we own such as houses, pets, and cars - but the way that some companies use their profits and power is putting the future of our planet at risk. There are two mechanisms by which they do this.

Firstly, consider a fossil fuel project such as the construction of a new coal mine or oil rig. The undertaking of these projects is huge, and cannot go ahead without insurance. This is where an insurance company will come in and ‘underwrite’ (insure) the project – despite the incredibly harmful impacts on the world that these activities have.

They will also often underwrite agricultural and extractive activities that cause deforestation and habitat destruction. Projects like these are often associated with human and labour rights violations, and have impacts on public health.

Secondly, the money that insurers make from their customers via premiums is often invested in industries with negative social or environmental impacts (or both) - with insurers investing hundreds of billions of dollars in coal, oil, and gas.

The irony behind insurers underwriting and investing in fossil fuel activity

In 2022, it was estimated that insurance companies lost $125bn due to natural disasters such as floods, hurricanes, heatwaves and droughts. Extreme weather events like these are on the rise due to carbon pollution – bolstered by the underwriting and investments from insurers. These companies focus on the short-term profit they’ll gain, but fossil fuel extraction will eventually undermine their ability to exist if this trend continues.

As well as this, the widely agreed transition to net-zero means that fossil fuel assets will start to diminish in value, or eventually become worthless, as we move to a world focused on producing less carbon. Investments held in the industry will soon become riskier than ever.

Driving change

Insurance companies should be shifting toward supporting climate solutions, restoration of ecosystems, improving working conditions, and supporting advances in public health - and ShareAction is dedicated to driving this shift forward.

After our last insurer ranking in 2021, we'll soon publish the findings of a new major piece of research into the insurance sector, where we rank the world’s largest insurance firms including Zurich, AIG and Tokio Marine. It’ll provide an overview of the current state of the sector, and make recommendations to insurance companies and policymakers about changes that must be made to protect people and the planet. Be sure to sign up to receive our emails to be the first to know when the new report has been released.

Getting the insurance industry to change is one of the most strategic and underused ways that we can help save the planet. That’s why this week (Monday 26 February to Sunday 3 March) is a global week of insurance action - and we’re calling for insurers to phase out the underwriting of, and investment in, fossil fuels.

Insure Our Future’s Global Week of Action takes place from Monday 26 February to Sunday 3 March - head to their website to see the breadth of actions they’re taking against irresponsible insurers.

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