A recent investigation conducted by ShareAction, a charity focused on responsible investment, has scrutinized the practices of the world’s 65 largest insurance companies, revealing significant shortcomings in the industry’s efforts to address a “triple whammy” – global warming, environmental degradation, and human rights protections.
Titled “Insuring Disaster 2024”, the report dissects the insurance sector’s role in underwriting and investing in ventures that exacerbate climate change, harm ecosystems, and neglect human rights. Notably, the study uncovered that only two insurers have pledged to avoid underwriting four of the globe’s most contentious fossil fuel initiatives.
In addition, a majority – two-thirds of the insurers – have no policies against underwriting companies involved in producing controversial weaponry, including chemical and cluster munitions. Furthermore, 30% of the evaluated insurers scored zero in developing policies aimed at safeguarding natural environments and biodiversity.
Despite the insurance industry annually disbursing over $100 billion for claims related to climate change impacts like flooding, storms, and fires over the past four years, investments and underwriting practices contributing to such disasters persist.
Claudia Gray, head of financial sector research at ShareAction, expressed concern over the sector’s lack of accountability.
“This report reveals the insurance sector’s abject failure to live up to its responsibilities to protect both people and planet. They have both a moral duty and business opportunity to adopt responsible investments and underwriting activities,” Gray said.
The report also features three league tables ranking property and casualty insurers, life and health insurers, and Lloyd’s of London managing agents.
The evaluations, based on 30 critical standards, spotlighted two French institutions, AXA Group and CNP Assurances SA, as relatively high achievers, while pointing out significant underperformers like Lloyd’s of London and entities such as Aegis Managing Agency, Sony Financial Group Inc, Nationwide Mutual Insurance Co, and Protective Life Insurance Co, which scored poorly.
While not explicitly mentioned on the rankings, Zurich Insurance recently shifted its sustainability strategy with the announcement that it will no longer provide new insurance underwriting for oil and gas projects.
Jonathan Middleton, senior researcher at ShareAction, emphasized the urgent need for the insurance industry to advance towards sustainability.
“What these rankings show is just how long a journey the insurance industry has to go on to meet net zero targets, protect nature, and meet their obligations to safeguard human rights,” Middleton said. “It is vital that they begin that journey immediately to ensure a sustainable future for both people and planet, as well as for the sake of their own long-term viability.”
The investigation highlights several industry failings, including inadequate policies on human rights, health, conventional weapons, and indigenous rights. It also criticises the insurance industry’s alleged insufficient consideration for biodiversity and points out the reportedly weak policies of the Lloyd’s of London marketplace, a significant player in global fossil fuel underwriting.
To address these challenges, “Insuring Disaster 2024” proposed 30 recommendations for insurers, urging comprehensive transition plans aligned with a 1.5°C net-zero pathway, robust risk assessments, biodiversity policies, and a clear stance on Indigenous and local community rights.
The report also called on policymakers and regulators to bridge the gaps where the industry falls short, aiming to catalyze a meaningful transition that safeguards both people and the planet.
ShareAction plans to engage with the scrutinized insurance companies in the coming weeks to discuss the findings and encourage a more responsible approach towards environmental and social governance, it said.
What are your thoughts on this story? Please feel free to share your comments below.
