Top insurers have become lightning rods in the ballooning climate change battleground as these companies are being pressured to stop underwriting policies for the oil and gas industry.
More than 140 groups, including climate activists, consumer rights and environmental organizations, are calling on companies to stop insuring a new wave of up to 20 liquid natural gas export terminals along the U.S. Gulf Coast, arguing they release large amounts of pollutants into the atmosphere, according to a June letter.
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Already in California, Allstate, one of the U.S.’s largest insurance companies, just joined State Farm in stopping the sale of property and casualty coverage to new customers in the state, saying it’s too costly after literally thousands of natural disasters over the last several years, high costs for housing and general inflation. Allstate also just recently requested a 40% homeowners insurance increase from the California Department of Insurance in April. State Farm, by far the largest property insurer in California, is asking for a 28% boost.
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When it comes to not insuring liquid natural gas terminals, industry officials defend natural gas for driving down greenhouse gas emissions as a cleaner fuel. And the Biden White House pushed LNG exports after Russia invaded Ukraine, seeking to help Europe get itself off of Russian energy.
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“Insurance companies literally bet their businesses on their risk assessments and don’t do so lightly. This is their field of expertise. By replacing high-emissions fuels and keeping the power and lights on for the EU during the war in Ukraine, U.S. LNG is ultimately a net positive for the environment and global energy security. U.S. LNG projects are being developed and operating under strict safety regulations with oversight from several federal and state agencies including the Department of Transportation and the U.S. Coast Guard,” said Daphne Magnuson of Natural Gas Supply Association and Center for LNG in a statement to FOX Business.
Still, the groups’ letter threatens protests at the offices of these oil and gas executives and a public media campaign, warning “we are no stranger to big fights. We’ve won multi-million dollar lawsuits” and are “involved in the highest level of federal policy conversations.”
Reports from Common Dreams indicate local communities and neighborhoods don’t want the new LNG terminals, having witnessed the explosion at a Freeport LNG terminal on Quintana Island, Texas, last year that sent clouds of toxic pollution over homes and local businesses, injuring several people. The letter added that between 2008 and 2017, 1,566 oil and gas workers died on the job.
Coal companies already have faced difficulties in getting insurance. The group Insure Our Future, which pressures insurers to stop underwriting policies for oil and gas companies, said insurance giant AIG in 2022 joined other companies in stopping the sale of insurance for new coal projects.
AXA SA is the first multinational underwriter to rule out new investments in the coal industry in 2015. It insures Freeport LNG. An AXA spokesperson told E&E News the firm has ceased underwriting new “greenfield” oil and gas developments if they don’t have “sufficient climate transition plans.” E&E first reported on the LNG insurance battle in June.
The American Property Casualty Insurance Association, which represents insurers, cautioned against limiting or eliminating specific coverage.
“Consumers are most benefited from a diverse insurance market where companies have different business models and assess risks according to their expertise. Insurers play an important role in helping protect families, businesses, and communities as our economy transitions to a greener energy future. The call for an immediate end to insurance services for certain fossil fuel activities and producers ignores the importance of providing an effective energy transition to renewable sources.
“As the world’s risk managers, property and casualty insurers’ purpose is to help consumers and businesses understand and mitigate the risks they face. Insurers play an active role in facilitating a more resilient economy through their investment strategies and by closely partnering with policyholders and creating products that support their own transition pathways. “Hard exits” prevent insurers from contributing what they do best – helping consumers and businesses understand physical and transition risk and operationalize their plans. Hard exits may also contribute to negative, global economic impacts, as we remain in a period where traditional fossil fuels are still very much in need and a hard exit would disproportionately impact marginalized communities and developing economies.”
Groups like Rainforest Action Network, Public Citizen and Oil Change International signed the letter, warning that continued support for liquefied natural gas facilities poses “reputational risks” to insurers. The letter also notes the oil and gas industry spent approximately $124.4 million lobbying the U.S. federal government in 2022.
The U.S. is now tied with Qatar as the largest exporter of LNG in the world.
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