In the western world, paying for insurance each month is as ubiquitous a routine as paying for the internet. Once insurance companies collect monthly premium payments, the industry turns around and invests the pool of money in profitable ventures — many of which are fossil fuel companies. A new coalition is teaming up to demand Big Insurance cut the lifeline it’s providing to the floundering fossil fuel industry.
Back in 2013, tens of thousands of insurance professionals ranked a set of extreme risks, noting which they predicted would pose the greatest threat to the insurance industry as a whole. “Pandemic” came in first, followed by “natural catastrophe.”
Seven years later, two-mile-wide tornadoes and looming megadrought set the backdrop for the coronavirus pandemic. Our current circumstances are no surprise to the insurance industry, according to Elana Sulakshana, energy finance campaigner at Rainforest Action Network. “They have the most sophisticated models. And they’re making business decisions to account for that,” she tells Truthout, in reference to a flurry of nonrenewal notices insurance companies have sent to California residents living in high-risk fire zones — policies that companies deem “bad business” because they carry a high likelihood of needing to be paid out.
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With oil prices having turned negative, some fossil fuel executives appear to be coming to terms with how the fossil fuel industry has just about hit rock bottom. As Scott Sheffield, the CEO of Pioneer Natural Resources told the Texas Railroad Commission in April, “No one wants to give us capital because we have all destroyed capital and created economic waste,” the Texas Tribune reported.
And yet the insurance industry — which props up the fossil fuel industry with hundreds of billions of dollars in coal, oil and electric utility stock — appears to be in denial. As companies cancel individual policies in vulnerable areas where global warming has heightened the incidence of fires and floods, the industry continues to cover new oil pipelines, including the Trans Mountain pipeline, which remains under construction amid the COVID-19 pandemic, thereby increasing risk to workers and Indigenous communities nearby. In addition to posing a threat to the Coldwater Indian Band’s main source of drinking water, three First Nations chiefs wrote in a statement, the pipeline is projected to elevate oil tanker traffic sevenfold, raising the likelihood of a coastal oil spill and the collapse of salmon stock. Ongoing construction means that temporary “man camps” already notorious for abuses and disappearances of Indigenous women now pose the dual threat of infected workers bringing in disease. “The level of hypocrisy is astounding,” says Sherry Pollack, the co-founder of 350 Hawaii.
On April 23, as part of a three-day online event paying tribute to the 50th anniversary of Earth Day, Pollack and Sulakshana, along with a coalition of over 90 groups called Stop the Money Pipeline, will ramp up efforts to urge insurance companies to pull out of the fossil fuel industry for good. The online protests and digital actions will target Liberty Mutual specifically, which has at least $8.9 billion invested in the fossil fuel industry. Activists will also target the largest asset management companies — BlackRock, Vanguard and State Street — demanding that they drop Lee Raymond from the board of JPMorgan Chase. Raymond has been on the board for 33 years, is the former CEO of ExxonMobil, the former chair of the American Petroleum Institute, and is an avid climate change denier.
When activists wage selfie storms and mass calls, they will ask Liberty Mutual to rule out insuring all future tar sands projects, including Enbridge’s Line 3 pipeline, and to drop insurance policies for the Keystone XL and Trans Mountain pipelines. They’ll also pressure Liberty Mutual to reinvest in clean energy companies. Activists with Stop the Money Pipeline have chosen the company as a target for a slew of reasons. Liberty Mutual continues to advertise on Fox News, even as the channel fuels climate change and coronavirus denial. And at the company’s annual policyholders’ meeting on April 8, Liberty Mutual executives failed to respond to customer concerns over climate that dozens of policy holders submitted in writing ahead of time, and closed down the meeting after six minutes. Liberty Mutual did not respond to Truthout’s request for comment on this situation by press time.
Perhaps one reason Big Insurance, including Liberty Mutual, has flown under the radar in supporting fossil fuel companies for so long, is that to an unsuspecting policyholder, it’s counterintuitive that the “experts in risk” would turn around and invest in the riskiest business. In addition to investing customers’ premium payments into fossil fuel stocks, insurance companies underwrite coal mining and replacing natural gas pipelines. There’s simply too much liability associated with fossil fuel infrastructure projects for companies to proceed without insurance. And given the rise in climate lawsuits, Sulakshana explains, executives rely on policies to cover their backs in case they are sued. “If the insurance industry tomorrow said, we’re not going to cover any projects or officers in the fossil fuel industry, that could halt the [fossil fuel] industry overnight,” she says.
Sulakshana thinks there’s a good chance Liberty Mutual will budge. Back in December 2019, following in-person protests that fall, the company hired Francis Hyatt for a new role as chief sustainability officer, and announced it would restrict some coal insurance. “They have a long way to go to meet the urgency of the crisis, but it certainly showed that they are listening and paying attention to what we are doing,” Sulakshana said.
The campaign has begun to attract insurance industry workers, as well as those training to work in the industry, who could be key to the campaign, given that the industry is facing a mounting worker shortage. As Schuyler Holder wrote in Teen Vogue in October 2019, just months shy of graduating from college, “I want to build a career with a company that is taking responsibility for its role in this crisis. Not one that is insuring drilling in the Arctic, or making payouts to an oil company for a spill in the Gulf of Mexico.” Given that the industry is counting on an influx of young talent to fill hundreds of thousands of jobs as baby boomers retire, the op-ed continued, now is the time to reform business practices that are driving climate change. “Let’s take our seat at the table,” Holder wrote, linking to a petition signed by hundreds of new and future insurance professionals.
Providing insurance to a pipeline company is often a collaborative affair. According to a certificate of insurance signed on March 21, 2019, a company called Zurich Insurance Ltd. covered the Trans Mountain pipeline up to about $10 million in damage. In the event of a major accident costing more than that, two other companies by the names of Lloyd’s and Ironshore Canada Ltd. — a subsidiary of Liberty Mutual — would step in to cover the next $25 million in damage. And so on and so forth. In total, Liberty Mutual contributes to providing three “layers” of protection. “If they move” Sulakshana explains, “other companies will move.”
Many of the other insurers do not offer individual policies, and are not as recognizable as Liberty Mutual, which in 2018 spent $263 million on advertisements for car insurance.
“We want to ensure that when people think of Liberty Mutual, they also think about the pipelines they’re insuring, the coal companies they’re insuring, the Indigenous rights abuses that they’re complicit in,” Sulakshana says. “Instead of increasing our risks,” Pollack concludes, “they can be helping us transition to the renewable energy future we need.”
This story is a part of Covering Climate Now’s week of coverage focused on Climate Solutions, to mark the 50th anniversary of Earth Day. Covering Climate Now is a global journalism collaboration committed to strengthening coverage of the climate story.