Los Angeles, April 9, 2024 /PRNewswire/ — Consumer Watchdog has reiterated its call for Insurance Commissioner Ricardo Lara to enforce transparency among insurance companies regarding their involvement in the climate crisis by mandating the disclosure of the fossil fuel projects they insure. The demand was made as Commissioner Lara convenes a climate summit on April 9-10 in Los Angeles.
The organization echoed the sentiments of over 60 environmental, consumer, and social justice groups, whose petition for regulations compelling the disclosure of fossil fuel underwriting and investments was rebuffed by Commissioner Lara in 2019. Last week, Insure Our Future revealed that 12 California insurance companies, despite announcing coverage restrictions in the state, earned an estimated $3.6 billion by insuring fossil fuel infrastructure. Notably, United States insurers have notably trailed behind their European counterparts in disclosing fossil fuel underwriting practices. With Zurich, the world’s 6th largest fossil fuel insurer, declaring its cessation of underwriting new oil and gas extraction and metallurgical coal projects, all major European insurers have halted insuring new oil and gas extraction, according to Insure Our Future.
Carmen Balber, Executive Director of Consumer Watchdog, asserted, “Commissioner Lara cannot claim to champion climate action without compelling insurance companies to disclose their role in exacerbating climate change. The insurance industry must be held accountable for shifting the burdens of climate change onto consumers while reaping substantial profits from investments in and underwriting of fossil fuel activities that harm the planet.”
Consumer Watchdog further argued that insurance companies complicit in climate change should bear additional responsibilities in mitigating its effects. In Connecticut, lawmakers and public interest groups have proposed levying a fee on insurers underwriting fossil fuel projects to fund disaster mitigation, a move that California should emulate.
The climate summit occurs amidst a backdrop of insurance companies significantly impacting Californians’ access to affordable home insurance through sales pauses and non-renewals. However, Consumer Watchdog criticized Commissioner Lara’s proposed remedy to the crisis, contending that it merely caters to the insurance industry’s preferences without ensuring increased access to coverage for Californian homeowners.
Commissioner Lara’s proposal involves deregulating key insurance consumer protections in exchange for insurance companies committing to expand home insurance coverage in wildfire-prone areas to 85% of their market share outside risky zones. However, Consumer Watchdog uncovered documents through the Public Records Act revealing two substantial loopholes in the agreement. Firstly, insurers could fulfill their commitment by offering basic policies akin to those already available under the FAIR Plan. Secondly, the commissioner retains the authority to waive the “85% commitment” for any insurer claiming inability to meet it.
The Insure Our Future campaign, a national coalition comprising environmental, consumer, and grassroots organizations, released a brief last week spotlighting the ‘Dirty Dozen’ insurers —those attributing coverage restrictions in California to climate risks— with an estimated $113 billion of investments in fossil fuels and $3.6 billion in underwriting income from such ventures. The campaign’s analysis suggests that homeowners could face property value losses ranging from $9.87 to $32.1 billion due to over 100,000 non-renewals.
