On March 5, Connecticut lawmakers will have a public hearing on whether insurance companies should be forced to disclose their involvement in the fossil fuel industry. A bill is working its way through the state senate that would assign the state insurance commissioner to investigate insurance companies concerning climate issues. The commissioner would determine if the companies had disclosed their involvement and investment in industries like coal and whether they had been assessed by third parties for climate risk. This bill would culminate in a recommendation by 2021 on whether insurance companies should be forced to disclose their involvement and profits from traditional energy sources.
Global Climate Concern
This push is part of a worldwide trend away from fossil fuels such as coal and tar sands. Instead, they are in favor of green energy and sustainable solutions. The strategy has been to pressure the companies that provide insurance to such enterprises to back out or limit their involvement.
Several major global insurance providers have pledged to withdraw from fossil fuels coverage, including The Hartford, a Connecticut insurance company. Hartford has committed to refuse policies or investments to companies that make twenty-five percent or more of their money from oil, and they will not provide coverage for new plants fueled by coal. They hope to have purged all involvement in such projects by 2023. The Hartford made $19 billion in 2018 and are the first major United States insurer to self-impose such restrictions.
Difficulties for Fossil Fuel Companies
Those convinced that fossil fuels like oil and coal are destroying the planet believe there is no time to waste, and any cost is necessary along the way. Obviously, laws like the one proposed and the global pressure is making it very difficult for fossil fuel companies. It is already difficult for companies mining coal and drilling tar sands to secure coverage, even simple property damage policies. From 2018 to 2019, the number of insurance providers that excluded fossil fuels doubled. Companies that rely on insurance for perennial problems such as black lung and workers’ compensation are in dire straits.
2021 and Beyond
Connecticut is the first state to pursue such measures. While this current bill would not place any restrictions on insurers, it would certainly expose them to PR that many would rather avoid. Connecticut is the insurance capital of America, with nearly 1,500 licensed insurers and $170 billion in premiums written annually.
With such a position, they could be set to spearhead a movement that would spark sweeping changes across the industry. That, or they could be setting up an opportunity for other providers to swoop in and fill in the gaps, who are perhaps less image conscious or sensitive to trends. Should the bill be signed into law, 2021 could be a landmark year for insurance in Connecticut and the United States.
Sources:
https://electrek.co/2020/03/06/connecticut-lawmaker-insurers-fossil-fuels/